At its prior year-end, VPN Company reported current assets of $60,000 and current liabilities of $55,000. 1. Acquired inventory for $200 cash. 2. Sold a long-term asset (equipment) for $4,000 cash. 3. Accrued wages payable of $1,500. Determine how each of the above transactions would increase, decrease, or have no effect on total current assets, total current liabilities, and the current ratio. Transaction 1. 2. 3. Current Assets Current Liabilities Current Ratio
At its prior year-end, VPN Company reported current assets of $60,000 and current liabilities of $55,000. 1. Acquired inventory for $200 cash. 2. Sold a long-term asset (equipment) for $4,000 cash. 3. Accrued wages payable of $1,500. Determine how each of the above transactions would increase, decrease, or have no effect on total current assets, total current liabilities, and the current ratio. Transaction 1. 2. 3. Current Assets Current Liabilities Current Ratio
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:At its prior year-end, VPN Company reported current assets of $60,000 and current liabilities of $55,000.
1. Acquired inventory for $200 cash.
2. Sold a long-term asset (equipment) for $4,000 cash.
3. Accrued wages payable of $1,500.
Determine how each of the above transactions would increase, decrease, or have no effect on total current assets, total current
liabilities, and the current ratio.
Transaction
1.
2.
3.
Current Assets
Current Liabilities
Current Ratio
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Step 1: Introduce to current ratio
VIEWStep 2: Working for current ratio of prior year end
VIEWStep 3: Working for current assets, current liabilities and current after transaction 1
VIEWStep 4: Working for current assets, current liabilities and current after transaction 2
VIEWStep 5: Working for current assets, current liabilities and current after transaction 3
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