Problem:
Nord Company had $375,000 of current assets and $150,000 of current liabilities before borrowing $70,000 from the bank with a 3-month note payable.
Required:
Question: What effect did the borrowing transaction have on Nord Company's current ratio?
a. The change in the current ratio cannot be determined.
b. The ratio decreased.
c. The ratio increased.
d. The ratio remained unchanged.
Note: Be sure to show how you arrived at your answer.