Effect of Transactions on Current Position AnalysisData pertaining to the current position of Lucroy Industries Inc. follow:Cash$417,500Marketable securities160,000Accounts and notes receivable (net)320,000Inventories700,000Prepaid expenses40,000Accounts payable240,000Notes payable (short-term)235,000Accrued expenses320,000Required:1. Compute (a) the working capital, (b) the current ratio, and (c) the quick ratio. Round ratios to one decimal place.a. Working capitalb. Current ratioc. Quick ratio2. Compute the working capital, the current ratio, and the quick ratio after each of the following transactions and record the results in the appropriate columns.Consider each transaction separately and assume that only that transaction affects the data given. Round ratios to one decimal place.TransactionWorking CapitalCurrent RatioQuick Ratioa. Sold marketable securities at no gain or loss, $55,000.b. Paid accounts payable, $120,000.c. Purchased goods on account, $135,000. d. Paid notes payable, $120,000.e. Declared a cash dividend, $125,000.f. Declared a common stock dividend on common stock, $40,000.$g. Borrowed cash from bank on a long-term note, $200,000.$4h. Received cash on account, $125,000.i. Issued additional shares of stock for cash, $570,000.j. Paid cash for prepaid expenses, $15,000.

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Accounts and notes receivable (net) 320,000 Inventories 700,000 Prepaid expenses 40,000 Accounts payable 240,000 Notes payable (short-term) 235,000 Accrued expenses 320,000 Required: 1. Compute (a) the working capital, (b) the current ratio, and (c) the quick ratio. Round ratios to one decimal place. a. Working capital b. Current ratio c. Quick ratio

Accounts and notes receivable (net) 320,000 Inventories 700,000 Prepaid expenses 40,000 Accounts payable 240,000 Notes payable (short-term) 235,000 Accrued expenses 320,000 Required: 1. Compute (a) the working capital, (b) the current ratio, and (c) the quick ratio. Round ratios to one decimal place. a. Working capital b. Current ratio c. Quick ratio

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Effect of Transactions on Current Position Analysis
Data pertaining to the current position of Lucroy Industries Inc. follow:
Cash
$417,500
Marketable securities
160,000
Accounts and notes receivable (net)
320,000
Inventories
700,000
Prepaid expenses
40,000
Accounts payable
240,000
Notes payable (short-term)
235,000
Accrued expenses
320,000
Required:
1. Compute (a) the working capital, (b) the current ratio, and (c) the quick ratio. Round ratios to one decimal place.
a. Working capital
b. Current ratio
c. Quick ratio
2. Compute the working capital, the current ratio, and the quick ratio after each of the following transactions and record the results in the appropriate columns.
Consider each transaction separately and assume that only that transaction affects the data given. Round ratios to one decimal place.
Transaction
Working Capital
Current Ratio
Quick Ratio
a. Sold marketable securities at no gain or loss, $55,000.
b. Paid accounts payable, $120,000.
c. Purchased goods on account, $135,000.

d. Paid notes payable, $120,000.
e. Declared a cash dividend, $125,000.
f. Declared a common stock dividend on common stock, $40,000.
$
g. Borrowed cash from bank on a long-term note, $200,000.
$4
h. Received cash on account, $125,000.
i. Issued additional shares of stock for cash, $570,000.
j. Paid cash for prepaid expenses, $15,000.

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