P12-60B. (Learning Objective 4: Computing effects of business transactions on selected ratios) Financial statement data of Tunisia Engineering include the following items:

Requirements 1. Compute Tunisia’s current ratio, debt ratio, and earnings per share.
2. Compute the three ratios after evaluating the effect of each transaction that follows. Consider each transaction independently.

a. Borrowed €110,000 on a long-term note payable.

b. Issued 20,000 shares of ordinary shares, receiving cash of €360,000.

c. Paid short-term notes payable, €28,000.

d. Purchased merchandise of €42,000 on account, debiting Inventory.

e. Received cash on account, €18,000.

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Cash 26,000 Accounts payable...... 106,000 Short-term investments... 34,000 Accrued liabilities....... 34,000 Accounts receivable, net.............. 87,000 Long-term notes payable.. 165,000 Inventories 145,000 Other long-term liabilities.. 32,000 Prepaid expenses. 8,000 Net income............ 98,000 Total assets............................... 677,000 Number of ordinary 47,000 Short-term notes payable............. 48,000 shares outstanding........... 106,000