Effect of Transactions on Working Capital, Current Ratio, and Quick Ratio The following account balances are taken from the records of Liquiform Inc.:

Required 1. Use the information provided to compute the amount of working capital and Liquiform’s current and quick ratios (round to three decimal points).
2. Determine the effect that each of the following transactions will have on Liquiform’s working capital, current ratio, and quick ratio by recalculating each and then indicating whether the measure is increased, decreased, or not affected by the transaction. (For the ratios, round to three decimal points.) Consider each transaction independently; that is, assume that it is the only transaction that takes place.

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Cash $ 70,000 Short-term investments 60,000 Accounts receivable 80,000 Inventory 100,000 Prepaid insurance 10,000 Accounts payable 75,000 Taxes payable 25,000 Salaries and wages payable 40,000 Short-term loans payable 60,000