Current Ratio Calculation for Assets

Steps:

• Initial current liabilities: $16,000 / 2 =$8,000.
• Year-end current liabilities: $8,000 × 1.5 =$12,000.
• Year-end current ratio equation: Current assets / $12,000 = 1.5.
• Year-end current assets: 1.5 × $12,000 =$18,000.

Why B is correct:

• $18,000 satisfies the current ratio formula (assets/liabilities = 1.5) after the 50% liabilities increase.

Why the others are wrong:

• A: Equals initial assets, but liabilities rose, requiring asset growth to achieve the new ratio.
• C: Yields ratio of $20,000/$12,000 ≈ 1.67, exceeding 1.5.
• D: Yields ratio of $30,000/$12,000 = 2.5, far above 1.5.

Final answer: B