A firm had current Assets of 300,000.It paid Current Liabilites of 60,000 After the payment , Current Ratio was 2:1 Determine Current Liabilites and working capital after and before the payment was made.

Explanation

Let the current liabilites after payment of Rs 60000 be x which reduces cash or bank (i.e current assets) by same amount . Thus,
Current Ratio =`("Current Assets(CA)")/("Current Liabilities (CL)")`
`2/1=(Rs 300000-Rs 60000)/(x)`
2x=Rs 240000
Current Liabilities after payment = `Rs 240000//2=Rs 120000`
Current Liabilities before payment =Rs 120000+Rs 60000=Rs 180000
Working capital after payment =Rs 240000 (CA)-Rs 120000(CL)=Rs 120000
Working capital before payment =current assets-current liabilities before payment
=Rs 300000-Rs 180000=Rs 120000.