Question
indicate for each of the following transactions whether the transaction would improve, weaken, or have no effect on the current ratio and working capital of
indicate for each of the following transactions whether the transaction would improve, weaken, or have no effect on the current ratio and working capital of Delphi, Inc. at June 30, 2017. The current ratio of the company is presently 1.2. (1) Write off an uncollectible account receivable, $6,800. The company does not use the Allowance method. (2) Repurchase capital stock in the open market for cash. (3) Pay $46,000 on a short-term notes payable. (4) Collect $70,000 on an accounts receivable. (5) Buy equipment on credit. (6) Give an existing creditor a short-term note payable in settlement of his account balance. The note will be paid after 9 months.
Note: Current Ratio = Current Assets Current Liabilities, and Working Capital = Current Assets - Current Liabilities.
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