Required:1. Compute the following amounts and ratios as of the beginning of the year: (Round your ratios to 2decimal places.)a. Working capitalb. Current ratioc. Acid-test ratio2. Indicate the effect of each of the transactions given above on working capital, the current ratio, and theacid-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 andamounts at the beginning of the period.The Effect onTransactionWorking CapitalCurrent RatioAcid-Test Ratiox. Paid a cash dividend previously declared NoneIncreaseIncreasea. Issued capital stock for cashb. Sold inventory at a gainc. Wrote off uncollectible accountsd. Declared a cash dividende. Paid accounts payablef. Borrowed on a short-term noteg. Sold inventory at a lossh. Purchased inventory on accounti. Paid short-term notes duej. Purchased equipment for cashk. Sold marketable securities at a loss1. Collected accounts receivable Denna Company's working capltal accounts at the beginning of the year followCashMarketable securitiesAccounts receivable, netInventoryPrepaid expensesAccounts payableNotes due within one yearAccrued liabilities$ 85,eee$ 25,600S 386,000$ 499, 000S 18, See$ 227,000$ 130,eee$ 73,500During the year, Denna Company completed the following transactions:x. Paid a cash dividend previously declared, $45,000.a. Issued additional shares of common stock for cash. $230,000.b Sold inventory costing $82.000 for $115,000, on accountc. Wrote off uncollectible accounts in the amount of $16,000, reducing the accounts recelvabie balance accordinglyd. Declared a cash dividend, $45.000.e Paid accounts payable, $124,000.f Borrowed cash on a short-term note with the bank, $82,500g. Sold inventory costing $19,500 for $13,000 cash.h. Purchased Inventory on account. $61.250.1. Pald off all short-term notes due, $212,500.J. Purchased equipment for cash, $87,000.k. Sold marketable securitles costing $15.600 for cash, $13,000.1. Collected cash on accounts recelvable. $96,500

Working capital is the capital or amount for day to day use in the business. Current ratio is the…

Denna Company's working capital accounts at the beginning of the year follow: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses Accounts payable Notes due within one year Accrued 1iabilities $ 85,e00 $ 25,600 S 386,ee0 S 499,e00 $ 18, see $ 227, eee $ 130, eee $ 73,500 During the year, Denna Company completed the following transactions x. Pald a cash dividend previously deciared, $45.000. a. Issued additional shares of common stock for cash, $230,000. b. Sold inventory costing $82.000 for $115,000, on account. c. Wrote off uncollectible accounts In the amount of $16.000, reducing the accounts receivable balance accordingly. d. Declared a cash dividend, $45,000. e. Paid accounts payable, $124,000. f. Borrowed cash on a short-term note with the bank, $82.500. g. Sold inventory costing $19.500 for $13.000 cash. h. Purchased Inventory on account. $61.250. 1. Pald off all short-term notes due, $212.50. J. Purchased equtpment for cash, $87,000. k. Sold marketable securities costing $15,600 for cash, $13,000. 1. Collected cash on accounts receivable, $96,500

Denna Company's working capital accounts at the beginning of the year follow: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses Accounts payable Notes due within one year Accrued 1iabilities $ 85,e00 $ 25,600 S 386,ee0 S 499,e00 $ 18, see $ 227, eee $ 130, eee $ 73,500 During the year, Denna Company completed the following transactions x. Pald a cash dividend previously deciared, $45.000. a. Issued additional shares of common stock for cash, $230,000. b. Sold inventory costing $82.000 for $115,000, on account. c. Wrote off uncollectible accounts In the amount of $16.000, reducing the accounts receivable balance accordingly. d. Declared a cash dividend, $45,000. e. Paid accounts payable, $124,000. f. Borrowed cash on a short-term note with the bank, $82.500. g. Sold inventory costing $19.500 for $13.000 cash. h. Purchased Inventory on account. $61.250. 1. Pald off all short-term notes due, $212.50. J. Purchased equtpment for cash, $87,000. k. Sold marketable securities costing $15,600 for cash, $13,000. 1. Collected cash on accounts receivable, $96,500

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter10: Liabilities: Current, Installment Notes, And Contingencies

Section: Chapter Questions

Problem 5PA: Payroll accounts and year-end entries The following accounts, with the balances indicated, appear in...

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Payroll accounts and year-end entries The following accounts, with the balances indicated, appear in the ledger of Garcon Co. on December 1 of the current year: The following transactions relating to payroll, payroll deductions, and payroll taxes Occurred during December: Dec. 2. Issued Check No. 410 for 3,400 to Jay Bank to invest in a retirement savings account for employees. 2. Issued Check No. 411 to Jay Bank for 27,046, in payment of 9,273 of social security tax, 2,318 of Medicare tax, and 15,455 of employees federal income tax due. 13. Journalized the entry to record the biweekly payroll. A summary of the payroll record follows: Dec. 13. Issued Check No. 420 in payment of the net amount of the biweekly payroll to fund the payroll bank account. 13. Journalized the entry to record payroll taxes on employees earnings of December13: social security tax, 4,632; Medicare tax, 1,158; state unemployment tax, 350; federal unemployment tax, 125. 16. Issued Check No. 424 to Jay Bank for 27,020, in payment of 9,264 of social security tax, 2,316 of Medicare tax, and 15,440 of employees federal income tax due. 19. Issued Check No. 429 to Sims-Walker Insurance Company for 31,500, in payment of the semiannual premium on the group medical insurance policy. 27. Journalized the entry to record the biweekly payroll. A summary of the payroll record follows: 27. Issued Check No. 541 in payment of the net amount of the biweekly payroll to fund the payroll bank account. 27. Journalized the entry to record payroll taxes on employees earnings of December27: social security tax, 4,668; Medicare tax, 1,167; state unemployment tax, 225; federal unemployment tax, 75. 27. Issued Check No. 543 for 20,884 to State Department of Revenue in payment of employees state income tax due on December 31. 31. Issued Check No. 545 to Jay Bank for 3,400 to invest in a retirement savings account for employees. 31. Paid 45,000 to the employee pension plan. The annual pension cost is 60,000. (Record both the payment and unfunded pension liability.) Instructions 1. Journalize the transactions. 2. Journalize the following adjusting entries on December 31: a. Salaries accrued: operations salaries, 8,560; officers salaries, 5,600; office salaries,1,400. The payroll taxes are immaterial and are not accrued. b. Vacation pay, 15,000.
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