(Learning Objective 4: Calculate the effects of business transactions on selectedratios) Financial statement data of Greatland Engineering include the following items:Cash ........................................Short-term investments..............Accounts receivable, net............Inventories ................................Prepaid expenses.......................Total assets ...............................Short-term notes payable...........$ 26,00036,00085,000147,0006,000677,00049,000Accounts payable ......................Accrued liabilities......................Long-term notes payable ...........Other long-term liabilities.........Net income................................Number of commonshares outstanding ...........$107,00032,000163,00034,00099,00046,000Requirements1. Calculate Greatland’s current ratio, debt ratio, and earnings per share. Round all ratios totwo decimal places.2. Calculate the three ratios after evaluating the effect of each transaction that follows.Consider each transaction separately.a. Borrowed $105,000 on a long-term note payableb. On January 1, issued 40,000 shares of common stock, receiving cash of $360,000c. Paid off short-term notes payable, $28,000d. Purchased $43,000 of merchandise on account, debiting Inventorye. Received cash on account, $17,000
(Learning Objective 4: Calculate the effects of business transactions on selected
ratios) Financial statement data of Greatland Engineering include the following items:
Cash ........................................
Short-term investments..............
Accounts receivable, net............
Inventories ................................
Prepaid expenses.......................
Total assets ...............................
Short-term notes payable...........
$ 26,000
36,000
85,000
147,000
6,000
677,000
49,000
Accounts payable ......................
Accrued liabilities......................
Long-term notes payable ...........
Other long-term liabilities.........
Net income................................
Number of common
shares outstanding ...........
$107,000
32,000
163,000
34,000
99,000
46,000
Requirements
1. Calculate Greatland’s
two decimal places.
2. Calculate the three ratios after evaluating the effect of each transaction that follows.
Consider each transaction separately.
a. Borrowed $105,000 on a long-term note payable
b. On January 1, issued 40,000 shares of common stock, receiving cash of $360,000
c. Paid off short-term notes payable, $28,000
d. Purchased $43,000 of merchandise on account, debiting Inventory
e. Received cash on account, $17,000
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