Analyse the impact of the given transactions on the current ratio .

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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.) Answer is complete but not entirely correct. Current Ratio 1.91 2.03 Transaction (1) Transaction (2)

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Chapter 13, Problem 13.9E

To determine

Analyse the impact of the given transactions on the current ratio.

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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.) Answer is complete but not entirely correct. Current Ratio 1.91 2.03 Transaction (1) Transaction (2)

Tabor Company has just prepared the following comparative annual financial statements for the current year: TABOR COMPANY Comparative Income Statement For the Years Ended December 31 Sales revenue (one-half on credit) Cost of goods sold. Gross profit Expenses (including $7,200 interest expense each year). Pretax income Income tax expense (30%) Net income Assets Cash Accounts receivable Inventory Property & equipment (net) Total assets Liabilities Accounts payable Income taxes payable Note payable, long-term Stockholders' equity TABOR COMPANY Comparative Balance Sheet At December 31 Capital stock ($5 par value) Retained earnings Total liabilities and stockholders' equity Current Year Prior Year $ 198,000 $ 257,400 93,600 124,800 132,600 96,200 36,400 10,920 $ 25,480 104,400 72,000 32,400 9,720 $ 22,680 Current Year $ 51,100 61,000 28,200 103,000 $ 243,300 $ 43,400 2,600 56,000 98,000 43,300 $ 243,300 Prior Year $ 39,600 40,000 44,400 121,000 $ 245,000 $ 46,200 1,300 56,000 106,000…

Current Ratio Data: Year 2018: 787.25% Year 2019: 951.50% Year 2020: 1105.00% Year 2021:1553.51% Year 2022:1540.03% Question: which of the following transactions and events would result in an improvement in Current Ratio in year 2020? receiving cash for unearned sales revenue a cash receipt from a customer for amounts owing on goods previously sold on credit acquiring cash proceeds from a 5-year interest-only bank loan A and B only A and C only B and C only All of the above None of the above