Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Data pertaining to the current position of Newlan Company are as follows: Cash $ 80,000 Temporary investments 160,000 Accounts and notes receivable (net) 235,000 Inventories

Data pertaining to the current position of Newlan Company are as follows:

Cash$ 80,000
Temporary investments160,000
Accounts and notes receivable (net)235,000
Inventories190,000
Prepaid expenses10,000
Accounts payable158,000
Notes payable (short-term)80,000
Accrued expenses12,000


1.  Compute (a) the working capital, (b) the current ratio, and (c) the quick ratio

Working capital
$
Current ratio 
Quick ratio 

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. Consider each transaction separately and assume that only that transaction affects the data given above. 

Transaction Working CapitalCurrent RatioQuick Ratio
a.  Sold temporary investments for cash at no gain or loss, $50,000.
$
b.  Paid accounts payable, $40,000. $
c.  Purchased goods on account, $75,000. $
d.  Paid notes payable, $30,000. $
e.  Declared a cash dividend, $15,000. $
f.  Declared a stock dividend on common stock, $24,000. $
g.  Borrowed cash from bank on a long-term note, $150,000. $
h.  Received cash on account, $72,000. $
i.  Issued additional shares of stock for cash, $300,000. $
j.  Paid cash for prepaid expenses, $10,000. $

Step by Step Solution

3.41 Rating (167 Votes )

There are 3 Steps involved in it

Step: 1

1 Working capital Current assets current liabilities see working below Working Capital 675000 250000 ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac

14th edition

1337270598, 978-1337270595

More Books

Students also viewed these Accounting questions

Question

Define the term split-dollar life insurance.

Answered: 1 week ago

Question

Is there statistical significance? What was the effect size?

Answered: 1 week ago

Question

Evaluate the integral, if it exists. Jo y(y + 1) dy

Answered: 1 week ago