Problem: A company has current assets that total $500,000, a current ratio of 2.

Question

Problem:
A company has current assets that total $500,000, a current ratio of 2.00, and uses the perpetual inventory method. Assume that the following transactions are completed: (1) sold $12,000 in merchandise on short-term credit for $15,000, (2) declared but did not pay dividends of $50,000, (3) paid prepaid rent in the amount of $12,000, (4) paid previously declared dividends in the amount of $50,000, (5) collected an account receivable in the amount of $12,000, and (6) reclassified $40,000 of long-term debt as a current liability.

Compute the updated current ratios (use two decimal points)

Transactions
(1)
(2)
(3)
(4)
(5)
(6)

The only part I got right is transaction which is 2.01 the rest I just can't nail the right number.

For transaction 2, dividends dont count as a liability right? So since 50,000 was declared and not paid there is no change in either current assets or current liabilities.
Therefore I figure the ratio to be 2.00 which is not the case.

For transaction 3, paying 12,000 in prepaid rent reduces 500,000-12,000=488,000.
The current liabilities are 250,000 therefore that should be decreased by 12,000 as well leaving the ratio to be:
488,000/238,000=2.05 but that is also incorrect.

I have similar work done for the rest but they are all wrong so could someone please show me how to do this right? What am I doing wrong.

First person to show how to do this/show me what i am doing wrong will be awarded with lifesaver

thanks



Edit:

I made a mistake for transaction 3, I know that prepaid rent is a current asset so it should be added to the 500,000 not subtracted but that did not help me either way.
512,000/250,000=2.05 still not right

Explanation / Answer

those answers are not all right can someone say the right answers?

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