Leach Incorporated had the following transactions occur involving current assets and current liabilities during February 2010. Feb.
Question:
Leach Incorporated had the following transactions occur involving current assets and current liabilities during February 2010.
Feb. 3 Accounts receivable of $15,000 are collected.
7 Equipment is purchased for $28,000 cash.
11 Paid $3,000 for a 3-year insurance policy.
14 Accounts payable of $12,000 are paid.
18 Cash dividends of $5,000 are declared.
Additional information:
1. As of February 1, 2010, current assets were $130,000, and current liabilities were $50,000.
2. As of February 1, 2010, current assets included $15,000 of inventory and $2,000 of prepaid expenses.
Instructions
(a) Compute the current ratio as of the beginning of the month and after each transaction.
(b) Compute the acid-test ratio as of the beginning of the month and after each transaction.
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
Step by Step Answer:
a Current ratio as of February 1 2010 261 130000 50000 Feb 3 261 No change in total current asset...View the full answer
Accounting Principles
ISBN: 978-0470533475
9th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
