E12-7 Analyzing the Impact of Selected Transactions on the Current Ratio LO12-8 Current assets for JC Inc. totalled $58,300, and the current ratio was 2.12. Assume that the following transaction were completed: (1) Purchased merchandise for $6,300 on short-term credit. (2) Purchased a delivery truck for $25,000-paid $8,450 cash and signed a two-year interest-bearing note for t balance. Required: 1. Determine without computations if the current ratio will increase, decrease, or remain unchanged after each transaction.
E12-7 Analyzing the Impact of Selected Transactions on the Current Ratio LO12-8 Current assets for JC Inc. totalled $58,300, and the current ratio was 2.12. Assume that the following transaction were completed: (1) Purchased merchandise for $6,300 on short-term credit. (2) Purchased a delivery truck for $25,000-paid $8,450 cash and signed a two-year interest-bearing note for t balance. Required: 1. Determine without computations if the current ratio will increase, decrease, or remain unchanged after each transaction.
Chapter1: Financial Statements And Business Decisions
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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 $58,300, and the current ratio was 2.12. Assume that the following transactions
were completed:
(1) Purchased merchandise for $6,300 on short-term credit.
(2) Purchased a delivery truck for $25,000-paid $8,450 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.
Transaction (1)
Transaction (2)
Answer is complete and correct.
Impact on Current Ratio
Decrease
Decrease
2. Compute the current ratio after each transaction. (Round the final answers to 2 decimal places.)
Transaction (1)
Transaction (2)
Answer is complete but not entirely correct.
Current Ratio
1.91 ✓
1.81 X
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