Question: Individual transactions often have a significant
Individual transactions often have a significant impact on ratios. This problem will consider the direction of such an impact.
Required:
Indicate the effects of the previous transactions on each of the following: total current
assets, total current liabilities, net working capital, and current ratio. Use + to indicate
an increase, − to indicate a decrease, and 0 to indicate no effect. Assume an initial current
ratio of more than 1 to 1.
Transcribed Image Text:
Total Total Net Working Capital Current Current Current Assets Liabilities Ratio a. Cash is acquired through issuance of additional common stock. b. Merchandise is sold for cash. (Assume a profit.) A fixed Asset is sold for more than book value. d. Payment is made to trade creditors for previous purchases. A cash dividend is declared and paid. f. A stock dividend is dedared and paid. g. Cash is obtained through long-term bank loans. h. A profitable firm increa ses its fixed assets depreciation allowance account. i. Current operating expenses are paid. j. Ten-year notes are issued to pay off accounts payabke. k. Accounts receivable are collected. 1. Equipment is purchased with short-term notes. m. Merchandise is purchased on credit. n. The estimated taxes payable are increased. o. Marketable securities are sold below cost. с. c.
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> / Required Determine the absolute change and the percentage for these items.
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> Answer the following multiple-choice questions: a. The following relate to Owens data in 2012. What is the ending inventory? Purchases …………………………..$580,000 Beginning inventory……………. 80,000 Purchase returns ………………….8,000 Sales …………………………………..900,000 Cost
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