FINANCIAL ACCOUNTING 9TH
16th Edition
ISBN: 9781308821672
Author: Libby
Publisher: MCG/CREATE
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 13, Problem 13.9E
To determine
Analyse the impact of the given transactions on the
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
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
Chapter 13 Solutions
FINANCIAL ACCOUNTING 9TH
Ch. 13 - Who are the primary users of financial statements?Ch. 13 - When considering an investment in stock, investors...Ch. 13 - How does product differentiation differ from cost...Ch. 13 - What are the two general methods for making...Ch. 13 - What are component percentages? Why are they...Ch. 13 - What is ratio analysis? Why is it useful?Ch. 13 - What do profitability ratios focus on? What is an...Ch. 13 - What do turnover ratios focus on? What is an...Ch. 13 - What do liquidity ratios focus on? What is an...Ch. 13 - What do solvency ratios focus on? What is an...
Ch. 13 - What do market ratios focus on? What is an example...Ch. 13 - Prob. 12QCh. 13 - Explain why rapid growth in total sales might not...Ch. 13 - A company has total assets of 500,000 and...Ch. 13 - Prob. 2MCQCh. 13 - Prob. 3MCQCh. 13 - Prob. 4MCQCh. 13 - Prob. 5MCQCh. 13 - Prob. 6MCQCh. 13 - Prob. 7MCQCh. 13 - Prob. 8MCQCh. 13 - Prob. 9MCQCh. 13 - Prob. 10MCQCh. 13 - Prob. 13.1MECh. 13 - Prob. 13.2MECh. 13 - Prob. 13.3MECh. 13 - Computing the Financial Leverage Percentage...Ch. 13 - Analyzing the Inventory Turnover Ratio A...Ch. 13 - Prob. 13.6MECh. 13 - Prob. 13.7MECh. 13 - Prob. 13.8MECh. 13 - Prob. 13.9MECh. 13 - Prob. 13.10MECh. 13 - Using Financial Information to Identify Companies...Ch. 13 - Prob. 13.2ECh. 13 - Prob. 13.3ECh. 13 - Prob. 13.4ECh. 13 - Prob. 13.5ECh. 13 - Prob. 13.6ECh. 13 - Prob. 13.7ECh. 13 - Prob. 13.8ECh. 13 - Prob. 13.9ECh. 13 - Prob. 13.10ECh. 13 - Inferring Financial Information from Ratios E13-11...Ch. 13 - Prob. 13.12ECh. 13 - Prob. 13.13ECh. 13 - Prob. 13.1PCh. 13 - Prob. 13.2PCh. 13 - Prob. 13.3PCh. 13 - Prob. 13.4PCh. 13 - Prob. 13.5PCh. 13 - Computing Comparative Financial Statements and...Ch. 13 - Analyzing Financial Statements Using Ratios Use...Ch. 13 - Prob. 13.8PCh. 13 - Prob. 13.9PCh. 13 - Prob. 13.1APCh. 13 - Prob. 13.2APCh. 13 - Calculating Profitability, Turnover, Liquidity,...Ch. 13 - Prob. 13.4APCh. 13 - Prob. 13.5APCh. 13 - Prob. 13.6APCh. 13 - Prob. 13.1CPCh. 13 - Prob. 13.2CPCh. 13 - Comparing Companies within an Industry Refer to...Ch. 13 - Prob. 13.4CPCh. 13 - Inferring Information from the DuPont Model Ratios...Ch. 13 - Prob. 13.6CP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- present the data in Balance sheetarrow_forwardPrepare the balance sheet for 2019arrow_forwardAccounts Receivable Analysis The following data are taken from the financial statements of Sigmon Inc. Terms of all sales are 2/10, n/45. 20Y3 20Υ2 20Υ1 Accounts receivable, end of year $175,000 $190,000 $204,200 Sales on account 1,003,750 985,500 a. For 20Y2 and 20Y3, determine (1) the accounts receivable turnover and (2) the number of days' sales in receivables. Round answers to one decimal place. Assume a 365-day year. 20Υ3 20Υ2 1. Accounts receivable turnover 2. Number of days' sales in receivables days days b. The collection of accounts receivable has improved v This can be seen in both the increase v in accounts receivable turnover and the decrease in the collection period. Feedback Check My Work a.1. Divide net sales by average accounts receivable. Average Accounts receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) ÷ 2. a.2. Divide average accounts receivable by average daily sales on account. Average Accounts receivable = (Beginning Accounts Receivable +…arrow_forward
- From the following information, find receivable turnover. Sales 375000 (60% credit ) Account receivable 31.12 125000 Current Assets 760000 Cost of sale 120000 Fixed Assets 1440000 Net profit 30000 Inventory 800000 Current Liabilities 600000. Total assets 125000 Account receivable 1.1 25000 Select one: O a. 3 O b. The correct answer not available О с.5 O d. 1.5arrow_forward3. The following data are taken from the financial statements of Sigmon Inc. Terms of all are 2/10, n/45. Accounts Receivable, end of year Sales on account of Required: 20Y3 $725,000 $5,637,000 a. For 20Y2 and 20Y3, determine: 1. Accounts Receivable Turnover 2. The number of Days' Sales in Receivables 20Y2 $650,000 $4,687,000 20Y1 $600,000 b. What conclusions can you draw from these data concerning Sigmon's accounts receivable and credit policies?arrow_forwardRequired information [The following information applies to the questions displayed below] Tyrell Company entered into the following transactions involving short-term liabilities. Year 1 April 28 Purchased $37,508 of merchandise on credit fron Locust, terms n/30. May 19 Replaced the April 28 account payable to Locust with a 90-day, 9%, $35,000 note payable along with paying $2,500 in cash. July 8 Borrowed $66,080 cash from NBR Bank by signing a 120-day, 12%, $66,088 note payable. Paid the amount due on the note to Locust at the maturity date. Paid the amount due on the note to NBR Bank at the maturity date. November 28 Borrowed $24,08e cash from Fargo Bank by signing a 60-day, 8%, $24,000 note payable. December 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank. Year 2 Paid the amount due on the note to Fargo Bank at the maturity date.arrow_forward
- Provide correct solutionarrow_forwardAccounts Receivable Analysis The following data are taken from the financial statements of Basinger Inc. Terms of all sales are 2/10, n/45. 20Υ3 20Υ2 20Y1 Accounts receivable, end of year $106,000 $113,000 $120,600 Sales on account 689,850 665,760 a. For 20Y2 and 20Y3, determine (1) the accounts receivable turnover and (2) the number of days' sales in receivables. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume a 365-day year. 20Y3 20Y2 1. Accounts receivable turnover 2. Number of days' sales in receivables days days b. The collection of accounts receivable has This can be seen in both the in accounts receivable turnover and the in the collection period.arrow_forwardRequired information [The following information applies to the questions displayed below.] Current Year ed Cash $ 11,500 Prior Year $ 14,200 Accounts receivable 61,500 27,000 Equipment, net Land Total assets 59,000 99,000 52,000 73,500 $ 231,000 $ 166,700 Express the items in common-size percents. Note: Round your percentage answers to one decimal place. Current Year Prior Year Cash % % ces Accounts receivable % % Equipment, net % % Land Total assets % % 0.0 % 0.0 %arrow_forward
- Construct the current assets section of the balance sheet from the following data. (Use cash as a plug figure after computing the other values.) Yearly sales (credit) $420,000 Inventory turnover 7 times Current liabilities $80,000 Current ratio 2 Average collection period 36 days Current assets: $ Cash ______ Accounts receivable ______ Inventory ______ Total current assets ______arrow_forwardAccounts Receivable Analysis The following data are taken from the financial statements of Sigmon Inc. Terms of all sales are 2/10, n/45. 20Y3 20Y2 20Υ1 Accounts receivable, end of year $113,600 $120,000 $128,200 Sales on account 829,280 781,830 a. For 20Y2 and 20Y3, determine (1) the accounts receivable turnover and (2) the number of days' sales in receivables. Round answers to one decimal place. Assume a 365-day year. 20Υ3 20Y2 1. Accounts receivable turnover 2. Number of days' sales in receivables days daysarrow_forwardAccounts Receivable Analysis The following data are taken from the financial statements of Basinger Inc. Terms of all sales are 2/10, n/45. 20Y3 20Y2 20Y1 Accounts receivable, end of year $171,400 $179,000 $186,000 Sales on account 1,068,720 1,003,750 a. For 20Y2 and 20Y3, determine (1) the accounts receivable turnover and (2) the number of days' sales in receivables. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume a 365-day year. 20Y3 20Y2 1. Accounts receivable turnover fill in the blank 1 fill in the blank 2 2. Number of days' sales in receivables fill in the blank 3 days fill in the blank 4 days b. The collection of accounts receivable has . This can be seen in both the in accounts receivable turnover and the in the collection period.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Accounts Receivable and Accounts Payable; Author: The Finance Storyteller;https://www.youtube.com/watch?v=x_aUWbQa878;License: Standard Youtube License