Selected amounts from Reingold Companys balance sheet from the beginning of the year follow Cash $ 56,000 Marketable Securities $ 5,000 Accounts receivable, net $ 316,400 Inventory $ 423,600 Prepaid expenses $ 5,200 Plant and equipment, net $ 810,000 Accounts payable $ 174,800 Accrued liabilities $ 47,400 Notes due within one year $ 72,000 Bonds payable in five years $ 126,000 During the year, the company completed the following transactions x Purchased inventory on account, $39,500 a Declared a cash dividend, $16,000 b Paid accounts payable, $77,600 c Collected cash on accounts receivable, $64,600 d Purchased equipment for cash, $63,800 e Paid a cash dividend previously declared, $16,000 f Borrowed cash on a short term note with the bank, $39,000 g Sold inventory costing $58,800 for $86,000, on account h Wrote off uncollectible accounts in the amount of $4,400 reducing the accounts receivable balance accordingly i Sold marketable securities costing $5,000 for cash, $3,400 j Issued additional shares of common stock for cash, $172,000 k Paid off all short term notes due, $111,000 Required 1 Compute the following amounts and ratios as of the beginning of the year a Working capital b Current ratio (Round your answer to 2 decimal places ) c Acid test ratio (Round your answer to 2 decimal places ) 2 Indicate the effect of each of the transactions given above on working capital, the current ratio, and the acid test ratio Give the effect in terms of increase, decrease, or none Item (x) is given as an example Consider each transaction independently and indicate their effects as compared to the ratios and amounts at the beginning of the period Transaction Working capital Current Ratio Acid test Ratio Purchased inventory on account None Decrease Decrease Declared a cash dividend Paid account payable Collected cash on accounts receivable Purchase equipment for cash Paid a cash dividend previously declared Borrowed cash on short term note with bank Sold inventory on account at more than it cost Wrote off uncollectable accounts Sold marketable securities at less than it cost Issued addition share of common stock for cash Paid of short term notes

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Selected amounts from Reingold Companys balance sheet from the beginning of the year follow: Cash $ 56,000 Marketable Securities $ 5,000 Accounts receivable, net $

Selected amounts from Reingold Companys balance sheet from the beginning of the year follow:


Cash	$	56,000
Marketable Securities	$	5,000
Accounts receivable, net	$	316,400
Inventory	$	423,600
Prepaid expenses	$	5,200
Plant and equipment, net	$	810,000
Accounts payable	$	174,800
Accrued liabilities	$	47,400
Notes due within one year	$	72,000
Bonds payable in five years	$	126,000

During the year, the company completed the following transactions:

x.	Purchased inventory on account, $39,500.
a.	Declared a cash dividend, $16,000.
b.	Paid accounts payable, $77,600.
c.	Collected cash on accounts receivable, $64,600.
d.	Purchased equipment for cash, $63,800.
e.	Paid a cash dividend previously declared, $16,000.
f.	Borrowed cash on a short-term note with the bank, $39,000.
g.	Sold inventory costing $58,800 for $86,000, on account.
h.	Wrote off uncollectible accounts in the amount of $4,400 reducing the accounts receivable balance accordingly.
i.	Sold marketable securities costing $5,000 for cash, $3,400.
j.	Issued additional shares of common stock for cash, $172,000.
k.	Paid off all short-term notes due, $111,000.

Required:

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

a.	Working capital_____

b.	Current ratio. (Round your answer to 2 decimal places.)

c.	Acid-test ratio. (Round your answer to 2 decimal places.)

Indicate the effect of each of the transactions given above on working capital, the current ratio, and the acid-test ratio. Give the effect in terms of increase, decrease, or none. Item (x) is given as an example: Consider each transaction independently and indicate their effects as compared to the ratios and amounts at the beginning of the period.

Transaction	Working capital	Current Ratio	Acid-test Ratio
Purchased inventory on account	None	Decrease	Decrease
Declared a cash dividend
Paid account payable
Collected cash on accounts receivable
Purchase equipment for cash
Paid a cash dividend previously declared
Borrowed cash on short term note with bank
Sold inventory on account at more than it cost
Wrote off uncollectable accounts
Sold marketable securities at less than it cost
Issued addition share of common stock for cash
Paid of short term notes