Effect of transactions on current position analysis Data pertaining to the current position of Forte Company follow: Cash $412,500 Marketable securities 187,500 Accounts and notes receivable (net) 300,000 Inventories 700,000 Prepaid expenses 50,000 Accounts payable 200,000 Notes payable (short-term) 250,000 Accrued expenses 300,000 Instructions 1. Compute (A) the working capital, (B) the current ratio, and (C) the quick ratio. (Round to one decimal place.) 2. List the following captions on a sheet of paper: Transaction Working Capital Current Ratio Quick Ratio Compute the working capital, the current ratio, and the quick ratio after each of the following transactions, and record the results in the appropriate columns. Consider each transaction the separately and assume that only that transaction affects the data given. (Round to one decimal place.) A. Sold marketable securities at no gain or loss, $70,000. B. Paid accounts payable. $ 125,000. C. Purchased goods on account. $ 110,000. D. Paid notes payable. $ 100,000. E. Declared a cash dividend. $150,000 F. Declared a common stock dividend on common stock. $50,000. G. Borrowed cash from bank on a long term note, $225,000. H. Received cash on account, $ 125,000. I. Issued additional shares of stock for cash, $600,000. J. Paid cash for prepaid expenses, $10,000.

BuyFind

Corporate Financial Accounting

15th Edition
Carl Warren + 1 other
Publisher: Cengage Learning
ISBN: 9781337398169
BuyFind

Corporate Financial Accounting

15th Edition
Carl Warren + 1 other
Publisher: Cengage Learning
ISBN: 9781337398169
Chapter 14, Problem 14.3APR
Textbook Problem

Effect of transactions on current position analysis

Data pertaining to the current position of Forte Company follow:

Cash $412,500
Marketable securities 187,500
Accounts and notes receivable (net) 300,000
Inventories 700,000
Prepaid expenses 50,000
Accounts payable 200,000
Notes payable (short-term) 250,000
Accrued expenses 300,000

Instructions

  1. 1. Compute (A) the working capital, (B) the current ratio, and (C) the quick ratio. (Round to one decimal place.)
  2. 2. List the following captions on a sheet of paper:
Transaction Working Capital Current Ratio Quick Ratio

Compute the working capital, the current ratio, and the quick ratio after each of the following transactions, and record the results in the appropriate columns. Consider each transaction the separately and assume that only that transaction affects the data given. (Round to one decimal place.)

  • A. Sold marketable securities at no gain or loss, $70,000.
  • B. Paid accounts payable. $ 125,000.
  • C. Purchased goods on account. $ 110,000.
  • D. Paid notes payable. $ 100,000.
  • E. Declared a cash dividend. $150,000
  • F. Declared a common stock dividend on common stock. $50,000.
  • G. Borrowed cash from bank on a long term note, $225,000.
  • H. Received cash on account, $ 125,000.
  • I. Issued additional shares of stock for cash, $600,000.

J. Paid cash for prepaid expenses, $10,000.

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Chapter 14 Solutions

Corporate Financial Accounting
Ch. 14 - Horizontal analysis The comparative accounts...Ch. 14 - Vertical analysis Income statement information for...Ch. 14 - Current position analysis The following items are...Ch. 14 - Accounts receivable analysis A company reports the...Ch. 14 - Inventory analysis A company reports the...Ch. 14 - Long-term solvency analysis The following...Ch. 14 - To determine: Times interest earned ratio Given...Ch. 14 - Asset turnover A company reports the following:...Ch. 14 - Return on total assets A company reports the...Ch. 14 - Common stockholders profitability analysis A...Ch. 14 - Earnings per share and price-earnings ratio A...Ch. 14 - Vertical analysis of income statement Revenue and...Ch. 14 - a Current fiscal year income from continuing...Ch. 14 - Common-sized income statement Revenue and expense...Ch. 14 - Vertical analysis of balance sheet Balance shed...Ch. 14 - a. Net income increase, 78,0% Horizontal analysis...Ch. 14 - a. (1) Current year working capital. 1,090,000...Ch. 14 - a. (1) Current years current ratio. 1,3 Current...Ch. 14 - Current position analysis The bond indenture for...Ch. 14 - Accounts receivable analysis The following data...Ch. 14 - Accounts receivable analysis Xavier Stores Company...Ch. 14 - Inventory analysis The following data were...Ch. 14 - Inventory analysis QT, Inc. and Elppa Computers,...Ch. 14 - Ratio of liabilities to stockholders' equity and...Ch. 14 - a. Hasbro, 1.7 Ratio of liabilities to...Ch. 14 - a. Mondelez International Inc., 1.4 Ratio of...Ch. 14 - a. YRC, 2.6 Asset turnover Three major segments of...Ch. 14 - Profitability ratios The following selected data...Ch. 14 - a. Year 3 return on total assets. 6.8%...Ch. 14 - Six measures of solvency or profitability The...Ch. 14 - Five measures of solvency or profitability The...Ch. 14 - Earnings per share, price-earnings ratio, dividend...Ch. 14 - a. Alphabet, 37.9 Price-earnings ratio; dividend...Ch. 14 - Earnings per share, discontinued operations The...Ch. 14 - Income statement and earnings per share for...Ch. 14 - Unusual items Explain whether Colston Company...Ch. 14 - Comprehensive Income Anson Industries, Inc....Ch. 14 - Horizontal analysis of income statement For 20V2,...Ch. 14 - Vertical analysis of income statement For 20Y2,...Ch. 14 - Effect of transactions on current position...Ch. 14 - Measures of liquidity, solvency, and profitability...Ch. 14 - Solvency and profitability trend analysis Addai...Ch. 14 - Horizontal analysis of income statement For 20Y2,...Ch. 14 - Vertical analysis of income statement For 20Y2,...Ch. 14 - Effect of transactions on current position...Ch. 14 - Measures of liquidity, solvency and profitability...Ch. 14 - Solvency and profitability trend analysis Crosby...Ch. 14 - Analyze and compare Amazon.com, Best Buy, and...Ch. 14 - Analyze and compare Alphabet, PepsiCo, and...Ch. 14 - Analyze Deere Company Deere Company (DE)...Ch. 14 - Analyze and compare Marriott and Hyatt Marriott...Ch. 14 - Ethics in Action Rodgers Industries Inc. completed...Ch. 14 - Communication The president of Freeman Industries...

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