12 :- Ratio of Current Assets (Rs 3,00,000) to Current Liabilities (Rs 2,00,000) is 1.5 : 1. The accountant of the firm is interested in maintaining a Current Ratio of 2:1 by paying off a part of the Current Liabilities. Compute amount of the Current Liabilities that should be paid so that the Current Ratio at the level of 2:1 may be maintained.
Solution :-
Solution :-
Current Assets = Rs 3,00,000
Current Liabilities = Rs 2,00,000
The accountant of the firm wants to maintain Current Ratio as 2 : 1
Let the Current Liabilities paid of be x
2 = 3,00,000 – x/2,00,000 – x
(2,00,000 – x) X 2 = 3,00,000 – x
4,00,000 – 2x = 3,00,000 – x
4,00,000 – 3,00,000 = -x + 2x
1,00,000 = x
Therefore, the liabilities of Rs 1,00,000 should be paid off.