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Transactions, working capital, and liquidity ratios. P3 Plum Corporation began the month of May with $700,000 of current assets, a current ratio of 2.50:1, and
Transactions, working capital, and liquidity ratios. P3 Plum Corporation began the month of May with $700,000 of current assets, a current ratio of 2.50:1, and an acid-test ratio of 1.102. During the month, it completed following transactions. The company uses a perpetual inventory system. May a Purchased s5o,ooo of merchandise inventory on credit. 8 Sold merchandise inventory that cost $55,000 for $110,000 cash. 10 Collected $20,000 cash on an account receivable. 15 Paid \$22,000 cash to settle an account payable. 17. Wrote off a $5,000 bad debt agrainst the Allowance for Doubtful Accounts account. 22 Dectared a s1 per share cash dividend on its 50,000 shares of outstanding common stock. 26 Paid the dividend declared on May 22. 27 Borrowed $100,000 cash by giving the bank a 30 -day, 10% note. 28 Borrowed s80,000 cash by signing a long-term secured note. 29 Used the s180,0oo cash proceeds from the notes to buy new machinery. Chock May az: Current ratio, 2.19 : Acid-test ratio, 1.11 May ag: Current ratio, 1.80; Working capital, sas. Required Prepare a table, similar to the following, showing Mums (1) current ratio, (2) acid-test ratio, and ( 3 ) working capital after esch transaction. Round ratios to two decimals
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