Fact Pattern: Jensen Corporation’s board of directors met on June 3 and declared a regular quarterly cash dividend of $.40 per share for a total value of $200,000. The dividend is payable on June 24 to all stockholders of record as of June 17. Excerpts from the statement of financial position for Jensen Corporation as of May 31 are presented as follows. Cash $ 400,000 Accounts receivable (net) 800,000 Inventories 1,200,000 Total current assets $2,400,000 Total current liabilities $1,000,000 Assume that the only transactions to affect Jensen Corporation during June are the dividend transactions. Question Jensen’s quick (acid test) ratio would be A.Decreased by the dividend declaration and increased by the dividend payment. B.Unchanged by the dividend declaration and decreased by the dividend payment. C.Unchanged by either the dividend declaration or the dividend payment. D.Decreased by the dividend declaration and unchanged by the dividend payment.
Fact Pattern: Jensen Corporation’s board of directors met on June 3 and declared a regular quarterly cash dividend of $.40 per share for a total value of $200,000. The dividend is payable on June 24 to all stockholders of record as of June 17. Excerpts from the statement of financial position for Jensen Corporation as of May 31 are presented as follows. Cash $ 400,000 Accounts receivable (net) 800,000 Inventories 1,200,000 Total current assets $2,400,000 Total current liabilities $1,000,000 Assume that the only transactions to affect Jensen Corporation during June are the dividend transactions. Question Jensen’s quick (acid test) ratio would be A.Decreased by the dividend declaration and increased by the dividend payment. B.Unchanged by the dividend declaration and decreased by the dividend payment. C.Unchanged by either the dividend declaration or the dividend payment. D.Decreased by the dividend declaration and unchanged by the dividend payment.
Century 21 Accounting Multicolumn Journal
11th Edition
ISBN:9781337679503
Author:Gilbertson
Publisher:Gilbertson
Chapter11: Accounting For Transactions Using A General Journal
Section11.3: Accounting For The Declaration And Payment Of A Dividend
Problem 1WT
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Fact Pattern:
Jensen Corporation’s board of directors met on June 3 and declared a regular quarterly cash dividend of $.40 per share for a total value of $200,000. The dividend is payable on June 24 to all stockholders of record as of June 17. Excerpts from the |
Cash
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$ 400,000
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800,000
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Inventories
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1,200,000
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Total current assets
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$2,400,000
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Total current liabilities
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$1,000,000
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Question
Jensen’s quick (acid test) ratio would be
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A.Decreased by the dividend declaration and increased by the dividend payment.
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B.Unchanged by the dividend declaration and decreased by the dividend payment.
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C.Unchanged by either the dividend declaration or the dividend payment.
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D.Decreased by the dividend declaration and unchanged by the dividend payment.
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