Q1:Denna company's working capital accounts at December 31, 19x6, are given below: Cash . $ 50,000 30,000 Marketable securities.. Accounts receivable (net).. Inventory... Prepaid expenses. Accounts payable.. Notes due within one year . Accrued liabilities .. 200,000 210,000 10,000 150,000 30,000 20,000 During 19x7, Denna Company completed the following transactions: x. Paid a cash dividend previously declared, $12,000. a. Issued additional shares of capital 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. 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. 8. 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. I. Collected cash on accounts receivable, $80,000. Required: 1- Compute the following amounts and ratios as of December 31,19x6 a. Working capital b. Current ratio C. Acid-test ratio

Q1:Denna company's working capital accounts at December 31, 19x6, are given below: Cash . $ 50,000 30,000 Marketable securities.. Accounts receivable (net).. Inventory... Prepaid expenses. Accounts payable.. Notes due within one year . Accrued liabilities .. 200,000 210,000 10,000 150,000 30,000 20,000 During 19x7, Denna Company completed the following transactions: x. Paid a cash dividend previously declared, $12,000. a. Issued additional shares of capital 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. 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. 8. 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. I. Collected cash on accounts receivable, $80,000. Required: 1- Compute the following amounts and ratios as of December 31,19x6 a. Working capital b. Current ratio C. Acid-test ratio

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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Question

Q1:Denna company's working capital accounts at December 31, 19x6, are
given below:
Cash
$ 50,000
Marketable securities..
30,000
Accounts receivable (net).
Inventory.
Prepaid expenses.
Accounts payable.
Notes due within one year ..
Accrued liabilities
200,000
210,000
10,000
150,000
30,000
20,000
During 19x7, Denna Company completed the following transactions:
x. Paid a cash dividend previously declared, $12,000.
a. Issued additional shares of capital 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.
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.
I. Collected cash on accounts receivable, $80,000.
Required:
1- Compute the following amounts and ratios as of December 31,19x6
a. Working capital
b. Current ratio
c. Acid-test ratio
2- For 19x7, indicate the effect of each of the transactions given above on working
capital, the current ratio and the acid-test ratio. Give the effect in terms of increase,

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