Problem 15-14 Effects of Transactions on Various Ratios [LO15-2]

Denna Company's working capital accounts at the beginning of the year follow:

Cash$62,000Marketable securities$28,000Accounts receivable, net$330,800Inventory$439,200Prepaid expenses$6,400Accounts payable$185,600Notes due within one year$84,000Accrued liabilities$52,800

During the year, Denna Company completed the following transactions:

1. Paid a cash dividend previously declared, $22,000.
2. Issued additional shares of common stock for cash, $184,000.
3. Sold inventory costing $63,600 for $92,000, on account.
4. Wrote off uncollectible accounts in the amount of $6,800, reducing the accounts receivable balance accordingly.
5. Declared a cash dividend, $22,000.
6. Paid accounts payable, $87,200.
7. Borrowed cash on a short-term note with the bank, $48,000.
8. Sold inventory costing $21,900 for $14,600 cash.
9. Purchased inventory on account, $44,000.
10. Paid off all short-term notes due, $132,000.
11. Purchased equipment for cash, $68,600.
12. Sold marketable securities costing $18,000 for cash, $15,000.
13. Collected cash on accounts receivable, $71,200.

Required:

1. Compute the following amounts and ratios as of the beginning of the year:

a. Working capital.

b. Current ratio.

c. Acid-test ratio.