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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 ratios in parts b through j to one decimal place. 2. List the following captions on a sheet of paper: 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 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

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 17, Problem 17.3APR
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. Compute (a) the working capital, (b) the current ratio, and (c) the quick ratio. Round ratios in parts b through j to one decimal place.

2. List the following captions on a sheet of paper:

Chapter 17, Problem 17.3APR, Effect of transactions on current position analysis Data pertaining to the current position of Forte

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 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 17 Solutions

Accounting
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