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Data pertaining to the current position of Forte Company are as follows: Cash $412,500 Marketable securities 187,500 Accounts and notes receivable (net) 300,000 Inventories 700,000

Data pertaining to the current position of Forte Company are as follows: Cash $412,500 Marketable securities 187,500 Accounts and notes receivable (net) 300,000 Inventories 700,000 Prepaid expenses 50,000 Accounts payable 200,000 Notes payable (short-term) 250,000 Accrued expenses 300,000 Required: 1. Compute (A) the working capital, (B) the current ratio, and (C) the quick ratio. Round ratios to one decimal place. 2. Compute the working capital, the current ratio, and the quick ratio after each of the following transactions, and record the results in the appropriate columns of the table provided. Consider each transaction separately and assume that only that transaction affects the data given. Round to one decimal place. A. Sold marketable securities at no gain or loss, $70,000. B. Paid accounts payable, $125,000. C. Purchased goods on account, $110,000. D. Paid notes payable, $100,000. E. Declared a cash dividend, $150,000. F. Declared a common stock dividend on common stock, $50,000. G. Borrowed cash from bank on a long-term note, $225,000. H. Received cash on account, $125,000. I. Issued additional shares of stock for cash, $600,000. J. Paid cash for prepaid expenses, $10,000. Starting Questions Shaded cells have feedback. 1. Compute the following. Round ratios to one decimal place A. Working capital: $900,000 B. Current ratio: 2.2 C. Quick ratio: 1.2 Points: 3 / 3 Feedback Check My Work 1. Compute the following. Round ratios to one decimal place A. For working capital, subtract current liabilities from current assets. B. For the current ratio, divide current assets by current liabilities. C. For the quick ratio, divide quick assets by current liabilities. Quick assets are cash, temporary investments, and receivables. Final Questions Shaded cells have feedback. 2. Compute the working capital, the current ratio, and the quick ratio after each of the following transactions, and record the results in the appropriate columns of the table provided. Consider each transaction separately and assume that only that transaction affects the data given. Round to one decimal place. Working Current Quick Transaction Capital Ratio Ratio A. $900,000 2.2 1.2 B. $900,000 1.2 C. $900,000 2.4 1.4 D. $900,000 E. $900,000 F. $900,000 G. $1,125,000 H. $ I. $ J. $1,725,000 Points: 9 / 30 Feedback Check My Work Set up T accounts and calculate new balances and new working capital, new current ratio and new quick ratio after each transaction.

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