Data pertaining to the current position of Forte Company follow:Cash $412,500Marketable securities 187,500Accounts and notes receivable (net) 300,000Inventories 700,000Prepaid expenses 50,000Accounts payable 200,000Notes payable (short-term) 250,000Accrued expenses 300,000 Instructions1. Compute (a) the working capital, (b) the current ratio, and (c) the quick ratio. Round ratios in parts b through j to one decimal place.2. List the following captions on a sheet of paper:Transaction Working Capital Current Ratio Quick Ratio 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 to one decimal place.a. Sold marketable securities at no gain or loss, $70,000.b. Paid accounts payable, $125,000.c. Purchased goods on account, $110,000.d. Paid notes payable, $100,000.e. Declared a cash dividend, $150,000.f. Declared a common stock dividend on common stock, $50,000.g. Borrowed cash from bank on a long-term note, $225,000.h. Received cash on account, $125,000.i. Issued additional shares of stock for cash, $600,000.j. Paid cash for prepaid expenses, $10,000.
Data pertaining to the current position of Forte Company follow:
Cash $412,500
Marketable securities 187,500
Accounts and notes receivable (net) 300,000
Inventories 700,000
Prepaid expenses 50,000
Accounts payable 200,000
Notes payable (short-term) 250,000
Accrued expenses 300,000
Instructions
1. Compute (a) the
2. List the following captions on a sheet of paper:
Transaction Working Capital Current Ratio Quick Ratio
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 to one decimal place.
a. Sold marketable securities at no gain or loss, $70,000.
b. Paid accounts payable, $125,000.
c. Purchased goods on account, $110,000.
d. Paid notes payable, $100,000.
e. Declared a cash dividend, $150,000.
f. Declared a common stock dividend on common stock, $50,000.
g. Borrowed cash from bank on a long-term note, $225,000.
h. Received cash on account, $125,000.
i. Issued additional shares of stock for cash, $600,000.
j. Paid cash for prepaid expenses, $10,000.
Trending now
This is a popular solution!
Step by step
Solved in 9 steps with 9 images
