Problem 11-12 (Algo) Effect of transactions on liquidity measures LO 1 Selected balance sheet accounts for Tibbetts Company on September 30, 2019, are as follows: Cash $ 48,000 Marketable securities 135,000 Accounts receivable, net 165,000 Inventory 187,500 Prepaid expenses 21,000 Total current assets $ 556,500 Accounts payable $ 108,000 Other accrued liabilities 26,400 Short-term debt 48,000 Total current liabilities $ 182,400 Required: Calculate the working capital, current ratio, and acid-test ratio for Tibbetts Company as of September 30, 2019. Summarized here are the transactions/events that took place during the fiscal year ended September 30, 2020. Prepare journal entries for the below transactions and Indicate the effect of each item on Tibbetts Company's working capital, current ratio, and acid-test ratio. Use + for increase, − for decrease, and (NE) for no effect. Credit sales for the year amounted to $360,000. The cost of goods sold was $234,000. Collected accounts receivable, $378,000. Purchased inventory on account, $252,000. Issued 750 shares of common stock for $27 per share. Wrote off $10,500 of uncollectible accounts using the allowance for bad debts. Declared and paid a cash dividend, $30,000. Sold marketable securities costing $39,000 for $46,500 in cash. Recorded insurance expense for the year, $18,000. The premium for the policy was paid in June 2019. Borrowed cash on a short-term bank loan, $15,000. Repaid principal of $60,000 and interest of $4,500 on a long-term bank loan. Calculate the working capital, current ratio, and acid-test ratio for Tibbetts Company as of September 30, 2019. (Round "Ratio" answers to 2 decimal places.) Working capital Current ratio Acid-test ratio

Corporate Financial Accounting

14th Edition

ISBN:9781305653535

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter14: Financial Statement Analysis

Section: Chapter Questions

Problem 14.6EX: Current position analysis The following data were taken from the balance sheet of Nilo Company at...

See similar textbooks

Problem 11-12 (Algo) Effect of transactions on liquidity measures LO 1

Selected balance sheet accounts for Tibbetts Company on September 30, 2019, are as follows:


Cash	$	48,000
Marketable securities		135,000
Accounts receivable, net		165,000
Inventory		187,500
Prepaid expenses		21,000
Total current assets	$	556,500
Accounts payable	$	108,000
Other accrued liabilities		26,400
Short-term debt		48,000
Total current liabilities	$	182,400

Required:

Calculate the working capital, current ratio, and acid-test ratio for Tibbetts Company as of September 30, 2019.
Summarized here are the transactions/events that took place during the fiscal year ended September 30, 2020. Prepare journal entries for the below transactions and Indicate the effect of each item on Tibbetts Company's working capital, current ratio, and acid-test ratio. Use + for increase, − for decrease, and (NE) for no effect.
1. Credit sales for the year amounted to $360,000. The cost of goods sold was $234,000.
2. Collected accounts receivable, $378,000.
3. Purchased inventory on account, $252,000.
4. Issued 750 shares of common stock for $27 per share.
5. Wrote off $10,500 of uncollectible accounts using the allowance for bad debts.
6. Declared and paid a cash dividend, $30,000.
7. Sold marketable securities costing $39,000 for $46,500 in cash.
8. Recorded insurance expense for the year, $18,000. The premium for the policy was paid in June 2019.
9. Borrowed cash on a short-term bank loan, $15,000.
10. Repaid principal of $60,000 and interest of $4,500 on a long-term bank loan.

Calculate the working capital, current ratio, and acid-test ratio for Tibbetts Company as of September 30, 2019. (Round "Ratio" answers to 2 decimal places.)


Working capital
Current ratio
Acid-test ratio

Expert Solution

Trending now

This is a popular solution!

Learn your way

Includes step-by-step video

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions