Question
indicate the effect of each of these transactions on working capital, current ratio, and acid-test ratio of the company. Increase, Decrease, or No Effect. Consider
indicate the effect of each of these transactions on working capital, current ratio, and acid-test ratio of the company. Increase, Decrease, or No Effect. Consider each transaction independently.
Working Capital | Current Ratio | Acid-Test Ratio | ||
a. | Purchased new plant assets for cash, $20,000. | |||
b. | Exchanged common stock for purchasing land. Estimated value of transaction, $80,000. | |||
c. | Payment of $40,000 on short-term notes payable. | |||
d. | Sold short-term marketable securities, that had a cost of $20,000, for $25,000 cash. | |||
e. | Sold common stock for $70,000 in cash. | |||
f. | Wrote off an account receivable in the amount of $2,000. | |||
g. | Declared a cash dividend in the amount of $5,000, to be paid later. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
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