Indicate whether the following independent transactions increase (+), decrease (), or do not affect (NE) the current
Question:
Indicate whether the following independent transactions increase (+), decrease (–), or do not affect (NE) the current ratio, the amount of working capital, and cash from operations.
Also indicate the amounts of any effects. The company presently has a current ratio of 2 to 1 along with current liabilities of$160,000.
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Working Capital Cash from Operations Effect $ Current Ratio Effect Effect$_ a. b. c. Paid accrued wages of $1,000 Purchased $20,000 worth of material on account. d. e. f. g. Received judgment notice from the court that the company must pay $70,000 damages for patent infringement within six months. Collected $8,000 of accounts receivable Purchased land for factory for $100,000 cash Repaid currently due bank note payable of $10,000 Received currently due note receivable of $15,000 from customer as consideration for sale of and h. Received cash of $90,000 from stockholders as donated capital . Purchased machine costing $50,000; $15,000 down and the balance to be paid in seven equal annual installments j. Retired bonds maturing five years hence at par of $50,000. Bonds have unamortized premium of $2,000 k. Declared dividends of $10,000 payable after year-end . Paid the dividends in k in cash. m. Declared a 5% stock dividend. n. Paid the stock dividend in m. o. Signed a long-term purchase contract of $100,000 p. q. r. s. to commence a year from now Borrowed $40,000 cash for one year Paid accounts payable of $20,000 Purchase a patent for $20,000 wrote off $15,000 of current marketable securities that became worthless. t. $8,500 of organization expenses were written off u. Recorded depreciation expense of $70,000 v. Sold $28,000 of merchandise on account. w. Sold a building for $90,000 that had a book value of $45,000 x. Sold a machine at cost for $5,000; received $2,500 down and the balance receivable in six months. Recorded income tax expense of $80,000, half of which
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Related Book For
Financial Statement Analysis
ISBN: 978-0078110962
11th edition
Authors: K. R. Subramanyam, John Wild
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