Plum Corporation began the month of May with $1,300,000 of current assets, a current ratio of 1.90:1, and an acid-test ratio of 1.20:1. During the month, it completed the following transactions (the company uses a perpetual inventory system).

Plum Corporation began the month of May with $1,300,000 of current assets, a current ratio of 1.90:1, and an acid-test ratio of 1.20:1. During the month, it completed the following transactions (the company uses a perpetual inventory system).

May 2 Purchased $60,000 of merchandise inventory on credit. 8 Sold merchandise inventory that cost $60,000 for $135,000 cash. 10 Collected $24,000 cash on an account receivable. 15 Paid $31,500 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 60,000 shares of outstanding common stock. 26 Paid the dividend declared on May 22. 27 Borrowed $120,000 cash by giving the bank a 30-day, 10% note. 28 Borrowed $130,000 cash by signing a long-term secured note. 29 Used the $250,000 cash proceeds from the notes to buy new machinery.