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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.

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