Effect of transactions on ratios (Learning Objective 4)

Financial statement data on 170 RV Park include the following:

Requirements 1. Compute 170 RV Park’s current ratio, debt ratio, and earnings per share. Round all ratios to two decimal places and use the following format for your answer:

2. Compute the three ratios after evaluating the effect of each transaction that follows. Consider each transaction separately.

a. Borrowed $27,000 on a long-term note payable

b. Issued 10,000 shares of common stock, receiving cash of $108,000

c. Purchased inventory of $48,000 on account

d. Received cash on account, $6,000 Format your answer as follows:

Transcribed Image Text:

Cash Accounts receivable, net $ 47,000 Accounts payable $ 96,000 123,000 Accrued liabilities 50,000 Inventories 189,000 Long-term liabilities 224,000 Total assets 833,000 Net income 110,000 Short-term notes payable 72,000 Common shares outstanding 20,000