Effect of transactions on liquidity measures. Selected balance sheet accounts for Tibbetts Company on September 30, 2013,

Question:

Effect of transactions on liquidity measures. Selected balance sheet accounts for Tibbetts Company on September 30, 2013, are as follows:

Cash.......................................................................................$ 96,000

Marketable securities............................................................. 174,000

Accounts receivable, net....................................................... 258,000

Inventory.............................................................................. 270,000

Prepaid expenses.................................................................. 42,000

Total current assets............................................................... $840,000

Accounts payable................................................................. $294,000

Other accrued liabilities....................................................... 66,000

Short-term debt.................................................................... 120,000

Total current liabilities......................................................... $480,000

Required:

a. Calculate the working capital, current ratio, and acid-test ratio for Tibbetts Company as of September 30, 2013.

b. Summarized here are the transactions/events that took place during the fiscal year ended September 30, 2014. Indicate the effect of each item on Tibbetts Company's working capital, current ratio, and acid-test ratio. Use + for increase, − for decrease, and (NE) for no effect.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...