Cummings, Inc. operates an equipment rental company and sells related supplies. The company’s current assets and current liabilities at the beginning of the year are listed in the table below:

 During the year Cummings completed the following transactions:
a. Paid a cash dividend previously declared of \($16,000.
b.\) Issued additional shares of common stock for cash, \($130,000.
c.\) Sold inventory costing \($70,000\) for \($100,000,\) on account.
d. Declared a cash dividend of \($17,000.
e.\) Paid accounts payable of \($75,000.
f.\) Borrowed cash on a short-term note with the bank, \($50,000.
g.\) Purchased inventory on account for \($80,000.
h.\) Paid off all short-term notes due, \($50,000.
i.\) Purchased equipment for cash, \($20,000.
j.\) Sold marketable securities costing \($25,000\) for \($22,000.
k.\) Collected cash on accounts receivable, \($120,000.
l.\) Paid interest on a note payable, \($3,000.

Required

1. Compute the following amounts and ratios at the beginning of the year:

a. Current ratio.

b. Acid-test (quick ratio).

2. Indicate the effect of each transaction listed above on the current ratio and the acid-test (quick ratio). Give the effect in terms of increase, decrease, or none. Item a is done as an example below to show the format used:

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Cash $127,000 Marketable Securities 75,000 Accounts receivable, net 235,000 Inventory 120,000 Prepaid expenses Accounts payable Notes payable, current Accrued expenses $ 30,000 190,000 60,000 40,000