Financial statement data of Style Traveler Magazine include the following items:
Cash ......................................................... $ 23,000
Accounts Receivable, Net................................. 81,000
Merchandise Inventory ................................... 185,000
Total Assets ................................................ 635,000
Accounts Payable .......................................... 99,000
Accrued Liabilities .......................................... 37,000
Short-term Notes Payable ................................. 51,000
Long-term Liabilities ...................................... 224,000
Net Income ................................................... 68,000
Common Shares Outstanding ........................... 20,000 shares
Requirements
1. Compute Style Traveler's current ratio, debt ratio, and earnings per share. Round all ratios to two decimal places, and use the following format for your answer:
Current Ratio Debt Ratio Earnings per Share
2. Compute the three ratios after evaluating the effect of each transaction that follows.
Consider each transaction separately.
a. Purchased merchandise inventory of $49,000 on account.
b. Borrowed $127,000 on a long-term note payable.
c. Issued 2,000 shares of common stock, receiving cash of $107,000.
d. Received cash on account, $5,000.