Selected amounts from Reingold Companys balance sheet from the beginning of the year follow: During the year,
Question:
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During the year, the company completed the following transactions:
x. Purchased inventory on account, $50,000.
a. Declared a cash dividend, $30,000.
b. Paid accounts payable, $100,000.
c. Collected cash on accounts receivable, $80,000.
d. Purchased equipment for cash, $75,000.
e. Paid a cash dividend previously declared, $30,000.
f. Borrowed cash on a short-term note with the bank, $60,000.
g. Sold inventory costing $70,000 for $100,000, on account.
h. Wrote off uncollectible accounts in the amount of $10,000 reducing the accounts receivable balance accordingly.
i. Sold marketable securities costing $12,000 for cash, $9,000.
j. Issued additional shares of common stock for cash, $200,000.
k. Paid off all short-term notes due, $160,000.
Required:
1. Compute the following amounts and ratios as of the beginning of the year:
a. Working capital.
b. Current ratio.
c. Acid-test ratio.
2. Indicate the effect of each of the transactions given above on working capital, the current ratio, and the acid-test ratio. Give the effect in terms of increase, decrease, or none. Item (x) is given as an example of the format touse:
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... 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... 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... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Step by Step Answer:
1 a Computation of working capital Current assets Cash 70000 Marketable securities 12000 Accounts re...View the full answer
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
