The following financial information is for Wildhorse Company. WILDHORSE COMPANY Balance Sheets December 31 Assets 2017 Cash $ 71,000 Debt investments (short-term) 53,000 Accounts receivable 107,000 Inventory 239,000 Prepaid expenses 30,000 Land 130,000 Building and equipment (net) 263,000 Total assets $893,000 Liabilities and Stockholders' Equity Notes payable 5171,000 Accounts payable 67,000 Accrued liabilities 41,000 Bonds payable, due 2020 251,000 Common stock, $10 par 200.000 Retained earnings 163,000 Total liabilities and stockholders' equity $893,000 2016 $ 67,000 40,000 92,000 168,000 22,000 130,000 185,000 $704,000 $104,000 55,000 41,000 172,000 200.000 132,000 $704,000 WILDHORSE COMPANY Income Statements For the Years Ended December 31 2017 2016 Sales revenue $893,000 $793,000 Cost of goods sold 644,000 575,000 Gross profit 249,000 218,000 Operating expenses 190,000 161,000 Net income $ 59,000 $57.000 Additional information: 1. Inventory at the beginning of 2016 was $115,000. 2. Accounts receivable (net) at the beginning of 2016 were $89,000. 3. Total assets at the beginning of 2016 were $637,000. 4. No common stock transactions occurred during 2016 or 2017, 5. All sales were on account. (a1) (b) The following are three independent situations and a ratio that may be affected. For each situation, compute the affected ratio (1) as of December 31, 2017, and (2) as of December 31, 2018, after giving effect to the situation. (1.83%).) Situation Ratio 1. 20,000 shares of common stock were sold at par on July 1, 2018. Net income for 2018 was $55,000. Return on common stockholders' equity 2. All of the notes payable were paid in 2018. All other liabilities remained at the same levels as at December 31, 2018. At December 31, 2018, total assets were $890,000. Debt to assets ratio 3. The market price of common stock was 59 and $12 on December 31, 2017 and 2018, respectively. Net income for 2018 was $55,000. Price-earnings ratio 2018 2017 % Change Return on common stockholders' equity Debt to assets ratio Price earnings ratio times times