Denna Company's working capital accounts at the beginning of the year follow:$ 50,000$ 30,000$ 200,000CashMarketable securitiesAccounts receivable, netInventoryPrepaid expensesAccounts payableNotes due within one yearAccrued liabilities$ 210,000$10,000$ 150,000$ 30,000$ 20,000During the year, Denna Company completed the following transactions:x. Paid a cash dividend previously declared, $12,000.a. Issued additional shares of common stock for cash, $100,000.b. Sold inventory costing $50,000 for $80,000, on account.c. Wrote off uncollectible accounts in the amount of $10,000, reducing the accounts receivable balance accordingly.d. Declared a cash dividend, $15,000.e. Paid accounts payable, $50,000.f. Borrowed cash on a short-term note with the bank, $35,000.g. Sold inventory costing $15,000 for $10,000 cash.h. Purchased inventory on account, $60,000.i. Paid off all short-term notes due, $30,000.j. Purchased equipment for cash, $15,000.k. Sold marketable securities costing $18,000 for cash, $15,000.1. Collected cash on accounts receivable, $80,000.Required:1. Compute the following amounts and ratios as of the beginning of the year:a. Working capital.b. Current ratio.c. Acid-test ratio.2. Indicate the effect of each of the transactions given above on working capital, the current ratio, and the acid-test ratio. Give theeffect in terms of increase, decrease, or none. Item (x) is given as an example. Consider each transaction independently and indicatetheir effects as compared to the ratios and amounts at the beginning of the period.Complete this question by entering your answers in the tabs below.Required 1 Required 2Compute the following amounts and ratios as of the beginning of the year: (Round your ratios to 2 decimal places.)a. Working capitalb. Current ratioc. Acid-test ratio< Required 1Required 2 >

Current Ratio is a measure of short term debt paying ability of a company with its current assets.…

Denna Company's working capital accounts at the beginning of the year follow: $ 50,000 $ 30,000 Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses Accounts payable Notes due within one year $ 30,000 $ 20,000 Accrued liabilities During the year, Denna Company completed the following transactions: $ 200,000 $ 210,000 $ 10,000 $ 150,000 x. Paid a cash dividend previously declared, $12,000. a. Issued additional shares of common stock for cash, $100,000. b. Sold inventory costing $50,000 for $80,000, on account. c. Wrote off uncollectible accounts in the amount of $10,000, reducing the accounts receivable balance accordingly. d. Declared a cash dividend, $15,000. +50.000

Denna Company's working capital accounts at the beginning of the year follow: $ 50,000 $ 30,000 Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses Accounts payable Notes due within one year $ 30,000 $ 20,000 Accrued liabilities During the year, Denna Company completed the following transactions: $ 200,000 $ 210,000 $ 10,000 $ 150,000 x. Paid a cash dividend previously declared, $12,000. a. Issued additional shares of common stock for cash, $100,000. b. Sold inventory costing $50,000 for $80,000, on account. c. Wrote off uncollectible accounts in the amount of $10,000, reducing the accounts receivable balance accordingly. d. Declared a cash dividend, $15,000. +50.000

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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