E3-39B. (Learning Objective 6: Analyze and evaluate liquidity and debt-paying ability) BurnesConsulting Company reported these ratios at December 31, 2018 (dollar amounts in millions):Current ratio = $20 = 2.00 $10 $60 Debt ratio = = 0.50 $30Burnes Consulting completed these transactions during 2019:a. Purchased equipment on account, $4b. Paid long-term debt, $7c. Collected cash from customers in advance, $5d. Accrued interest expense, $6e. Made cash sales, $8Determine whether each transaction improved or hurt the company’s current ratio and debt ratio.

Question

E3-39B. (Learning Objective 6: Analyze and evaluate liquidity and debt-paying ability) Burnes
Consulting Company reported these ratios at December 31, 2018 (dollar amounts in millions):
Current ratio = $20 = 2.00 $10 $60 Debt ratio = = 0.50 $30
Burnes Consulting completed these transactions during 2019:
a. Purchased equipment on account, $4
b. Paid long-term debt, $7
c. Collected cash from customers in advance, $5
d. Accrued interest expense, $6
e. Made cash sales, $8
Determine whether each transaction improved or hurt the company’s current ratio and debt ratio.

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Accounting

Accounting Ratio Analysis

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: Name the two main components of stockholders’ equity. Describe the main sources of change in each co...

A: Stockholder’s Equity is the amount of remaining assets if all the liabilities in the business are be...

Q: Which type of lease will not increase a company’s assets or long-term liabilities?a. A one-year oper...

A: Lease:   Lease is a contractual agreement whereby the right to use an asset for a particular period...

Q: Which of the following would be considered an assurance engagement?a. Giving an opinion on a prize p...

A: Click to see the answer

Q: “In an EDI system, only the customer needs to verify that the order being placed is from a valid sup...

A: Electronic Data Interchange: Electronic data interchange (EDI) is the channel between the computer s...

Q: Shamrock Inc. presented the following data. Net income   $2,670,000 Preferred stock: 55,000 sha...

A: Earnings per share (EPS): The amount of net income available to each shareholder per common share ou...

Q: he following data are given for Bahia Company: Budgeted production 1,032 units Actual productio...

A: Variance: Variance refers to the difference level in the actual cost incurred and standard cost. The...

Q: Why is continuing education required to maintain certification?

A: Auditing is the process by which assertions made by management about financial transactions of a com...

Q: describe a scenario in which you as a nonaccountant might us accounting.

A: A process that involves the recording transactions of financial nature is known as accounting.  

Q: 2) a) ISA 315 Identifying and Assessing the Risks of Material Misstatement through Understanding the...

A: The auditor can have an understanding of the entity and the internal control system. Internal contro...

Q: Explain how a business can earn a positive gross profit on its sales and still have a net loss.

A: Gross profit: It can be defined as the difference between the cost of goods sold and the net sales r...

Q: The discount on a bond payable becomesa. additional interest expense in the year the bonds are sold....

A: Bond payable: It can be defined as a debt taken by the company for a longer period and reflects the ...

Q: https://www.chegg.com/homework-help/questions-and-answers/required-1-balances-impacted-company-decid...

A: Contingent liability is future liability whose payment in the future depends upon the uncertain futu...

Q: What is a business risk?

A: Click to see the answer

Q: Juventus Motor Cars Co (Juventus) manufactures a range of motor cars and its year end is 30 June 201...

A: The substantive audit procedures involve taking steps to ensure that the valuation of inventory stat...

Q: The internal control procedures in Philips Company make the following provisions. Identify the princ...

A: Employees have physical custody of assets but do not have access to accounting records – Responsibil...

Q: What are some of the functions of a state board of public accountancy?

A: Click to see the answer

Q: The following information is available for Hapley Co.∙ November 30 bank statement shows a $1,895 bal...

A: Bank reconciliation statement: Bank Reconciliation Statement is a statement prepared to reconcile th...

Q: What is PNL?

A: As per accounting, PNL stands for Profit and Loss statement. . It is a part of financial statements ...

Q: Parris Company has shipped $20,000 of goods to Harlow Co., and Harlow Co. has arranged to sell the g...

A: Consignment: It can be defined as an arrangement made by the business in which one party, known as a...

Q: Solve this now

A: Given information is: Growth rate of money supply = 0.04 Growth rate of velocity = 0.01  

Q: Volume-Based Costing versus ABC Eastern Chemical Company produces three products. Theoperating resul...

A: 1. Determine the manufacturing cost per unit for each of the products using the volume-based method....

Q: Starts Inc. gathered the following data for use in developing the budgets for the first quarter (Jan...

A: Sales Budget : Sales budget is the first and basic component of master budget and it shows the expe...

Q: Tisdale Incorporated reports the following amount in its December 31, 2021, income statement. Sa...

A: 1. Prepare a multiple-step income statement.    

Q: S3-9. (Learning Objective 3: Adjust the accounts for interest expense) Trent Restaurantborrowed $110...

A: Given: The Trent Restaurant borrowed $110,000 on October 1 by signing a note payable to Hometown Ban...

Q: Wayward Company wants to prepare interim financial statements for the first quarter. The company wis...

A: Net sales = Sales - Sales returns = $1,211,160 - $8,410 = $1,202,750 Estimated cost of goods sold = ...

Q: 2Zena Technology sells arc computer printers for $55 per unit. Unit product costs are: Direct materi...

A: Unit product cost = Direct materials + Direct labor + Manufacturing overhead

Q: Flexible Budget and Variances for Depreciation Clark Company’s master budget includes$360,000 for eq...

A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for yo...

Q: Wright Company’s Cash account shows a $27,500 debit balance and its bank statement shows $25,800 on ...

A: Bank Reconciliation is the statement by which bank balance as per cash book is matched with bank bal...

Q: Erin Company recently changed its system of internal controls over cash disbursements.  The system i...

A: Internal control activities are used so that accounting system is prevented from errors and frauds. ...

Q: When using the direct method of preparing the statement of cash flows, cash receipts fromoperating a...

A: Cash flow from operating activities: In the direct method, cash flow from operating activities is co...

Q: Substantial equivalency refers toa. An auditor’s tendency not to believe management’s assertions wit...

A: Substantial equivalency: The concept where CPAs licensed in one state is allowed to practice in anot...

Q: At Reyes Company, checks are not prenumbered because both the purchasing agent and the treasurer are...

A: Internal control is a management task which is the set of rules and procedures which are set by the ...

Q: What does auditing around the computer mean versus auditing through the computer? Why is this so imp...

A: Auditing Around the Computer and Auditing Through the Computer: In auditing around the computer, th...

Q: Qualitative characteristics of accounting information - Relevance - Reliability - Comparability - Co...

A: The qualitative characteristics of accounting information is useful for decision and reporting purpo...

Q: For accounting purposes, what is an account?

A: Bookkeeping: It refers to the systematic recording of all the financial activities of the company. A...

Q: Comparing Three Depreciation Methods Waylander Coatings Company purchased waterproofing equipment on...

A: Depreciation is the non cash expenditure which is charged in the income statement. This expenditure ...

Q: You are told the column totals in a trial balance are not equal. After careful analysis, you discove...

A: SL No.  Statements Account Status Amount ($) a The debit column of the Trial Balance Correctly Sta...

Q: Companies sell common stock to raise long-term capital. What are the pros and cons of selling stock?...

A: Common Stock : Common stock is a type of security that represents ownership of equity in a company. ...

Q: Identify which of the following accounts would be included in a post-closing trial balance. Salaries...

A: Post-Closing Trial Balance:   After passing all the journal entries and the closing entries of the p...

Q: The issuance of stock for cash is reported on the statement of cash flows undera. financing activiti...

A: Issuance of stock: It refers to the number of shares that are sold to the stockholders from number o...

Q: What does a flexible budget enable that a simple comparison of the planning budget to actualresults ...

A: Flexible budget performance report: A tool used to compare the actual and budgeted results generated...

Q: On the statement of cash flows, increases and decreases in long-term assets resulting fromcash trans...

A: Classification of activities in cash flow statement   Following are the four classifications of cash...

Q: Why do product costing systems using a single, volume-based cost driver tend to overcost highvolume ...

A: Costing: Costing is a technique used in cost accounting to determine the cost of a product. With th...

Q: Expressing accounts receivable as a percentage of total assets is an example ofa. ratio analysis.b. ...

A: Accounts receivable is an asset account. It is reported in the balance sheet under the assets sectio...

Q: An auditor’s purpose in auditing the information contained in the pension footnote mostlikely is to ...

A: The correct answer is Option C.

Q: Starts Inc.  produces a product for which the standard specifies 4 yards of material per unit. The s...

A: As posted multiple sub parts we are answering only first three sub parts kindly repost the unanswere...

Q: Research and development costs a. Are recorded as research and development assets. b. Are capitalize...

A: Research and development costs: Research and development costs refer to the expenditures spent on re...

Q: Below are amounts found in the income statements of three companies.Required: 1. For each company, c...

A: Gross profit ratio = Gross profit / Sales

Q: Would like to know if the cost item's manfacturing cost are direct or indirect

A: Direct Cost Direct cost refers to the expenses incurred in manufacturing activity which can be direc...

Q: Indicate whether each statement best describes the allowance (A) method or the direct write-off (DW)...

A: Click to see the answer