Effect of Transactions on Current Position Analysis

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	190,000
Prepaid expenses	10,000
Accounts payable	158,000
Notes payable (short-term)	80,000
Accrued expenses	12,000

Instructions:

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

Working capital		$fill in the blank 1
Current ratio		fill in the blank 2
Quick ratio		fill in the blank 3

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. Format working capital as whole dollars. Round the current ratio and the quick ratio to one decimal place.

Transaction		Working Capital	Current Ratio	Quick Ratio
a. Sold temporary investments for cash at no gain or loss, $50,000.		$fill in the blank 4	fill in the blank 5	fill in the blank 6
b. Paid accounts payable, $40,000.		$fill in the blank 7	fill in the blank 8	fill in the blank 9
c. Purchased goods on account, $75,000.		$fill in the blank 10	fill in the blank 11	fill in the blank 12
d. Paid notes payable, $30,000.		$fill in the blank 13	fill in the blank 14	fill in the blank 15
e. Declared a cash dividend, $15,000.		$fill in the blank 16	fill in the blank 17	fill in the blank 18
f. Declared a stock dividend on common stock, $24,000.		$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, $150,000.		$fill in the blank 22	fill in the blank 23	fill in the blank 24
h. Received cash on account, $72,000.		$fill in the blank 25	fill in the blank 26	fill in the blank 27
i. Issued additional shares of stock for cash, $300,000.		$fill in the blank 28	fill in the blank 29	fill in the blank 30
j. Paid cash for prepaid expenses, $10,000.		$fill in the blank 31	fill in the blank 32	fill in the blank 33