Valley Company Has Cash, Current Liabilities, and Long-Term Liabilities of $110,000

question 76

Essay

Valley Company has cash, current liabilities, and long-term liabilities of $110,000, $20,000, and $31,000, respectively. Valley has no current assets other than cash. How much cash can Valley use to acquire equipment so that amount of current assets is double the amount of current liabilities?
a. $10,000
b. $70,000
c. $91,000
d. $60,000

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Definitions:

Pre-Qualified

The state of having been evaluated and deemed eligible for something, such as a loan or service, based on preliminary criteria.

Mass Affluent

Individuals with a significant amount of disposable income, though not wealthy by traditional standards, making them a target for certain luxury goods and financial services.

80/20 Rule

A theory that suggests that 20 percent of heavy users account for 80 percent of the total demand.

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Consumers who use or purchase a product or service much more frequently than average users.