Problem 13-19B Effect of transactions on current ratio and working capitalLowery Company has a current ratio of 2:1 on June 30, Year 3. Indicate whether each of the follow-ing transactions would increase (+), decrease (-), or not affect (NA) Lowery's current ratio and itsworking capital.Requireda. Issued 10-year bonds for $300,000 cash.b. Paid cash to settle an account payable.c. Sold merchandise for more than cost.d. Recognized depreciation on plant equipment.e. Purchased a machine by issuing a long-term note payable.f. Purchased merchandise inventory on account.g. Received customer payment on account receivable.h. Paid cash for federal income tax expense (assume that the expense has not been previouslyaccrued).i. Declared cash dividend payable in one month.j. Received cash for interest on a long-term note receivable (assume that interest has not been previ-ously accrued).k. Received cash from issuing a short-term note payable.1. Traded a truck for a sedan.

Step 1: Effect of given transactions on Lowrey's Current Ratio and its working capital: Current…

Answered: Problem 13-19B Effect of transactions…

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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Problem 16-17 (Static) Interpretation of Financial Ratios [LO16-2, LO16-3, LO16-6] Pecunious Products, Incorporated's financial results for the past three years are summarized below: Sales trend Current ratio Acid-test ratio Accounts receivable turnover Inventory turnover Dividend yield Dividend payout ratio Dividends paid per share* Year 3 128.0 2.5 9.4 6.5 7.1% 40% $1.50 Year 2 115.0 2.3 0.9 10.6 7.2 6.5% 50% $ 1.50 Year 1 100.0 2.2 1.1 12.5 8.0 5.8% 60% $ 1.50 *There have been no changes in common stock outstanding over the three-year period. Required: Review the results above and answer the following questions: 1. Is it becoming easier for the company to pay its bills as they come due? 2. Are customers paying their accounts at least as fast now as they were in Year 1? 3. Are the accounts receivable increasing, decreasing, or remaining constant? 4. Is inventory increasing, decreasing, or remaining constant? 5. Is the market price of the company's stock going up or down? 6. Is the…
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