Current assets for JC Inc. totalled $34,440, and the current ratio was 164. Assume that the following transactions were completed: (1)Purchased merchandise for $6,500 on short term credit. (2) Purchased a delivery truck for $15,000-paid $4125 cash and signed a two-year interest bearing note for the balance. Required: 1. Determine without computations if the current ratio will increase, decrease, or remain unchanged after each transaction. Impact on Current Ratio Transaction (1) Transaction (2) 2. Compute the current ratio after each transaction. (Round the final answers to 2 decimal places.) Transaction (1) Transaction (2) Current Ratio
Current assets for JC Inc. totalled $34,440, and the current ratio was 164. Assume that the following transactions were completed: (1)Purchased merchandise for $6,500 on short term credit. (2) Purchased a delivery truck for $15,000-paid $4125 cash and signed a two-year interest bearing note for the balance. Required: 1. Determine without computations if the current ratio will increase, decrease, or remain unchanged after each transaction. Impact on Current Ratio Transaction (1) Transaction (2) 2. Compute the current ratio after each transaction. (Round the final answers to 2 decimal places.) Transaction (1) Transaction (2) Current Ratio
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:E12-7 Analyzing the Impact of Selected Transactions on the Current Ratio LO12-8
Current assets for JC Inc. totalled $34,440, and the current ratio was 1.64. Assume that the following transactions were completed:
(1)Purchased merchandise for $6,500 on short-term credit.
(2) Purchased a delivery truck for $15,000-paid $4,125 cash and signed a two-year interest-bearing note for the balance.
Required:
1. Determine without computations if the current ratio will increase, decrease, or remain unchanged after each transaction.
Impact on Current Ratio
Transaction (1)
Transaction (2)
2. Compute the current ratio after each transaction. (Round the final answers to 2 decimal places.)
Transaction (1)
Transaction (2)
Current Ratio
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