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Gil Corporation has current assets of $90,000 and current liabilities of $180,000. Required: Compute the effect of each of the following independent transactions on Gil's current ratio: 1. Refinancing a $30,000 long-term mortgage with a short-term note. 2. Purchasing $50,000 of merchandise inventory with short-term accounts payable. 3. Paying $20,000 of short-term accounts payable.  4. Collecting $10,000 of short-term accounts receivable.

Gil Corporation has current assets of $90,000 and current liabilities of $180,000. Required: Compute the effect of each of the following independent transactions on Gil's current ratio: 1. Refinancing a $30,000 long-term mortgage with a short-term note. 2. Purchasing $50,000 of merchandise inventory with short-term accounts payable. 3. Paying $20,000 of short-term accounts payable.  4. Collecting $10,000 of short-term accounts receivable.

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 14MC: Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the...
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Gil Corporation has current assets of $90,000 and current liabilities of $180,000.

Required:

Compute the effect of each of the following independent transactions on Gil's current ratio:

1. Refinancing a $30,000 long-term mortgage with a short-term note.

2. Purchasing $50,000 of merchandise inventory with short-term accounts payable.

3. Paying $20,000 of short-term accounts payable. 

4. Collecting $10,000 of short-term accounts receivable.

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