Effect of Transactions on Current Position Analysis

Data pertaining to the current position of Lucroy Industries Inc. are as follows:

Cash		$442,500
	Marketable securities		162,500
Accounts and notes receivable (net)		335,000
Inventories		700,000
Prepaid expenses		42,000
Accounts payable		230,000
Notes payable (short-term)		235,000
Accrued expenses		320,000

Required:

1. Compute (a) the working capital, (b) the current ratio, and (c) the quick ratio. Round ratios to one decimal place.

a. Working capital	$897,000
b. Current ratio	2.1
c. Quick ratio	1.2

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 separatelyand assume that only that transaction affects the data given. Round ratios to one decimal place.

Transaction		Working Capitat		Current Ratio			Quick Ratio
	a. Sold marketable securities at no gain or loss, $60,000.		$897,000			2.1			1.2
	b. Paid accounts payable, $135,000.		897,000			2.4			1.2
	c. Purchased goods on account, $115,000.		897,000			2.0			1.0
	d. Paid notes payable, $115,000.		897,000			2.4			1.2
	e. Declared a cash dividend, $130,000.
	f. Declared a common stock dividend on common stock, $35,000.
	g. Borrowed cash from bank on a long-term note, $230,000.
	h. Received cash on account, $105,000.
	i. Issued additional shares of stock for cash, $550,000.
	j. Paid cash for prepaid expenses, $8,000.