Question
P 6-12 Individual transactions often have a significant impact on ratios. This problem wil consider the direction of such an impact. Total Current Assets
P 6-12 Individual transactions often have a significant impact on ratios. This problem wil consider the direction of such an impact. Total Current Assets Total Current Liabilities Net Working Capital Current Ratio a. C. Cash is acquired through issuance of additional common stock. b. Merchandise is sold for cash. (Assume a profit.) A fixed asset is sold for more than book value. d. Payment is made to trade creditors for previous c. f. g. h. i. purchases. A cash dividend is declared and paid. A stock dividend is declared and paid. Cash is obtained through long-term bank loans. A profitable firm increases its fixed assets depreciation allowance account. Current operating expenses are paid. Ten-year notes are issued to pay off accounts payable. Accounts receivable are collected. Equipment is purchased with short-term notes. k. 1. m. Merchandise is purchased on credit. n. The estimated taxes payable are increased. 0. Marketable securities are sold below cost. Required Indicate the effects of the previous transactions on each of the following: total cur- rent assets, total current liabilities, net working capital, and current ratio. Use + to indicate an increase, -to indicate a decrease, and 0 to indicate no effect. Assume an initial current ratio of more than 1 to 1.
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