Question
Financial statement data of American Traveler Magazine include the following items: Cash $ 23,000 Accounts receivable, net 79,000 Inventories 184,000 Total assets 634,000 Accounts payable
Financial statement data of American Traveler Magazine include the following items:
Cash | $ 23,000 |
Accounts receivable, net | 79,000 |
Inventories | 184,000 |
Total assets | 634,000 |
Accounts payable | 104,000 |
Accrued liabilities | 40,000 |
Short-term notes payable | 47,000 |
Long-term liabilities | 221,000 |
Net income | 74,000 |
Common shares outstanding | 60,000 |
Requirements
1. Compute American Traveler’s current ratio, debt ratio, and earnings per share. Round all ratios to two decimal places, and use the following format for your answer:
Current Ratio | Debt Ratio | Earnings per Share |
2. Compute the three ratios after evaluating the effect of each transaction that follows. Consider each transaction separately.
a. Purchased inventory of $49,000 on the account.
b. Borrowed $122,000 on a long-term note payable.
c. Issued 6,000 shares of common stock, receiving cash of $103,000.
d. Received cash on account, $3,000.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
1 Current ratio Current assets Current liabilities Current ratio Current ...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started