Question
Effect of Transactions on Current Position Analysis Data pertaining to the current position of Lucroy Industries Inc. follow: Cash $447,500 Marketable securities 187,500 Accounts and
Effect of Transactions on Current Position Analysis
Data pertaining to the current position of Lucroy Industries Inc. follow:
| Cash | $447,500 |
| Marketable securities | 187,500 |
| Accounts and notes receivable (net) | 300,000 |
| Inventories | 750,000 |
| Prepaid expenses | 46,000 |
| Accounts payable | 210,000 |
| Notes payable (short-term) | 230,000 |
| Accrued expenses | 300,000 |
Required:
Compute (a) the working capital, (b) the current ratio, and (c) the quick ratio. Round ratios to one decimal place.
| a. Working capital | $fill in the blank 1 |
| b. Current ratio | fill in the blank 2 |
| c. Quick ratio | fill in the blank 3 |
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. Round ratios to one decimal place.
| Transaction | Working Capital | Current Ratio | Quick Ratio | ||
| a. Sold marketable securities at no gain or loss, $80,000. | $fill in the blank 4 | fill in the blank 5 | fill in the blank 6 | ||
| b. Paid accounts payable, $110,000. | $fill in the blank 7 | fill in the blank 8 | fill in the blank 9 | ||
| c. Purchased goods on account, $120,000. | $fill in the blank 10 | fill in the blank 11 | fill in the blank 12 | ||
| d. Paid notes payable, $120,000. | $fill in the blank 13 | fill in the blank 14 | fill in the blank 15 | ||
| e. Declared a cash dividend, $145,000. | $fill in the blank 16 | fill in the blank 17 | fill in the blank 18 | ||
| f. Declared a common stock dividend on common stock, $40,000. | $fill in the blank 19 | fill in the blank 20 | fill in the blank 21 | ||
| g. Borrowed cash from bank on a long-term note, $225,000. | $fill in the blank 22 | fill in the blank 23 | fill in the blank 24 | ||
| h. Received cash on account, $130,000. | $fill in the blank 25 | fill in the blank 26 | fill in the blank 27 | ||
| i. Issued additional shares of stock for cash, $645,000. | $fill in the blank 28 | fill in the blank 29 | fill in the blank 30 | ||
| j. Paid cash for prepaid expenses, $11,000. | $fill in the blank 31 | fill in the blank 32 | fill in the blank 33 | ||
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Principles of Auditing and Other Assurance Services
Authors: Ray Whittington, Kurt Pany
19th edition
978-0077804770, 78025613, 77804775, 978-0078025617
