Question
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
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 |
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Auditing And Assurance Services
Authors: David Ricchiute
7th Edition
0324117760, 978-0324117769
