1: Comparative financial statements for A Co. for the fiscal year ending December 31 is as follows: A Co. Income Statement (dollars in thousands) 2022 Sales S 78,320 A Co. Balance Sheet 2022 Cost of goods sold 46,980 2021 $64,000 37,000 Question 2: Indicate the effect of each of the transactions given above on working capital, the current ratio, and the quick ratio. Give the effect in terms of increase, decrease, or none. Item (x) is given as an example: Consider each transaction independently and indicate their effects as compared to the ratios and amounts at the beginning of the period. 2021 Gross margin 31,340 27,000 Assets Current assets: Selling and administrative expenses: Transaction Cash 1,220 S 1,340 Selling expenses 10,500 10,500 Accounts receivable, net 10,800 7,000 Administrative expenses 7,100 6,800 (x) Purchased inventory on account The Effect on Working Capital Current Ratio None Decrease Quick Ratio Decrease Inventory 13,900 12,200 (a) Declared a cash dividend Prepaid expenses 780 660 Total selling and administrative expenses 17,600 17,300 (b) Paid accounts payable (c) Collected accounts receivable Total current assets 26,700 21,200 Net operating income 13,740 9,700 Interest expense 940 940 Property and equipment: Land 9,500 9,500 Net income before taxes 12,800 8,760 Buildings and equipment, net 41,826 38,266 Income taxes 5,120 3,504 Total property and equipment 51,326 47,766 Net income 7,680 5,256 (d) Purchased equipment for cash (e) Paid a cash dividend previously declared (f) Borrowed on a short-term note (g) Sold inventory at a profit (h) Wrote off uncollectible accounts (1) Sold marketable securities at a loss (i) Issued common stock for cash (k) Paid off short-term notes Total assets 78,026 $68,966 Liabilities and Stockholders' Required: Equity Compute the following financial data for short-term creditors for this year: Current liabilities: Accounts payable 19,200 $17,500 1. Working capital. Accrued payables 1,060 880 Notes payable, short term 200 200 2. Current ratio. Total current liabilities 20,460 18,580 Long-term liabilities: Bonds payable 9,400 9,400 3. Acid-test ratio. Total liabilities 29,860 27,980 4. Accounts receivable turnover. Stockholders' equity: Common stock 1,600 1,600 Additional paid-in capital 4,000 4,000 Retained earnings 42,566 35,386 Total stockholders' equity 48,166 40,986 Total liabilities and stockholders' 5. Average collection period. 6. Inventory turnover. 7. Average sale period. $ 78,026 $68,966 equity