Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please answer each box! Plum Corporation began the month of May with $900,000 of current assets, a current ratio of 2.60:1, and on acid-test ratio

please answer each box!
image text in transcribed
image text in transcribed
image text in transcribed
Plum Corporation began the month of May with $900,000 of current assets, a current ratio of 2.60:1, and on acid-test ratio of 1.40:1 During the month, it completed the following transactions (the company uses a perpetual inventory system). May 2 Purchased $75,000 of merchandise inventory on credit. 8 Sold merchandise inventory that cost $60,000 for $150,000 cash. 10 Collected $30,000 cash on an account receivable. 15 Paid $30,000 cash to settle an account payable. 17 Wrote off a $5,000 bad debt against the Allowance for Doubtful Accounts account. 22 Declared a $1 per share cash dividend on its 65,000 shares of outstanding common stock. 26 Paid the dividend declared on May 22. 27 Borrowed $115,000 cash by giving the bank a 30-day, 108 note. 28 Borrowed $135,000 cash by signing a long-term secured note. 29 Used the $250,000 cash proceeds from the notes to buy new machinery Required: Complete the table below showing Plum's (1) current ratio. (2) acid-test ratio, and (3) working capital after each transaction. (Do not round intermediate calculations. Round your ratios to 2 decimal places and the working capitals to nearest dollar amount. Amounts to be deducted should be indicated with a minus sign.) Required: Complete the table below showing Plum's (1) current ratio, (2) acid-test ratio, and (3) working capital after each transaction. (Do not round intermediate calculations. Round your ratios to 2 decimal places and the working capitals to nearest dollar amount. Amounts to be deducted should be indicated with a minus sign.) Transaction Current Assets Quick Assets Current Liabilities Current Ratio Acid-Test Ratio Working Capital 2.60 1.40 $ 553,846 $ 900,000 $ 484,615 S 346,154 Beginning May 2 Balance 900,000 346,154 May 8 Balance May 10 Balance May 15 Balance May 17 Balance May 22 Balance May 15 Balance May 17 Balance May 22 Balance May 26 Balance May 27 Balance May 28 Balance May 29 Balance

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting and Reporting

Authors: Barry Elliott, Jamie Elliott

14th Edition

978-0273744535, 273744445, 273744534, 978-0273744443

More Books

Students also viewed these Accounting questions