Denna Company\'s working capital accounts at the beginning of the year follow: C
ID: 2405870 • Letter: D
Question
Denna Company's working capital accounts at the beginning of the year follow: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses Accounts payable Notes due within one year Accrued liabilities $ 81,000 $ 24,400 $376,400 $ 488,600 $ 15,700 $ 219,800 $ 122,000 $ 69,900 During the year, Denna Company completed the following transactions x. Paid a cash dividend previously declared, $41,000 a. Issued additional shares of common stock for cash, $222,000 b. Sold inventory costing $78,800 for $111,000, on account. c. Wrote off uncollectible accounts in the amount of $14,400, reducing the accounts receivable balance accordingly d. Declared a cash dividend, $41,000 e. Paid accounts payable, $117,600 f. Borrowed cash on a short-term note with the bank, $76,500 g. Sold inventory costing $17,520 for $11,680 cash. h. Purchased inventory on account, $58,250 i. Paid off all short-term notes due, $198,500 j. Purchased equipment for cash, $83,800 k. Sold marketable securities costing $14,400 for cash, $12,000. I. Collected cash on accounts receivable, $92,100 Required: 1. Compute the following amounts and ratios as of the beginning of the year: (Round your ratios to 2 decimal places.) a. Working capital b. Current ratio c. Acid-test ratioExplanation / Answer
1
working Capital
Current Assets
-
Current Liabilities
working Capital
$ 986,100.00
-
$ 411,700.00
$ 574,400.00
Current Assets- ($ 81000+ 24400+376400+488600+15700)
Current Liabilities--($ 219800+122000+69900)
2
Current ratio
Numerator
/
denominator
Inventory Turnover
Current Assets
/
Current Liabilities
Inventory Turnover
$ 986,100.00
/
$ 411,700.00
2.40
times
3
Acid test ratio
Numerator
/
denominator
Acid test ratio
Liquid Assets
/
Current liabilities
Acid test ratio
$ 481,800.00
$ 411,700.00
1.17
to 1
Quick assets- Cash +Accounts Receivables and short term Investments
Effect of transactions
Working Capital
Current Ratio
Acid-Test ratio
a
Increase
Increase
Increase
b
Increase
Increase
Increase
c
Decrease
Decrease
Decrease
d
Decrease
Decrease
None
e
None
Increase
Increase
f
None
Decrease
Decrease
g
Increase
Increase
Increase
h
None
Decrease
Decrease
i
None
Increase
Increase
j
Decrease
Decrease
Decrease
k
Decrease
Decrease
Decrease
l
None
None
None
Working note
Current Assets
Current Liabilities
Quick assets
Working capital
Current ratio
Quick ratio
Balance
$ 986,100.00
$ 411,700.00
$ 481,800.00
$ 574,400.00
2.40
1.17
A
$ 222,000.00
$ 222,000.00
Balance
$ 1,208,100.00
$ 411,700.00
$ 703,800.00
$ 796,400.00
2.93
1.71
B
$ 32,200.00
$ 32,200.00
Balance
$ 1,240,300.00
$ 411,700.00
$ 736,000.00
$ 828,600.00
3.01
1.79
C
$ (14,400.00)
$ (14,400.00)
Balance
$ 1,225,900.00
$ 411,700.00
$ 721,600.00
$ 814,200.00
2.98
1.75
D
$ (41,000.00)
Balance
$ 1,184,900.00
$ 411,700.00
$ 721,600.00
$ 773,200.00
2.88
1.75
E
$ (117,600.00)
$ (117,600.00)
$ (117,600.00)
Balance
$ 1,067,300.00
$ 294,100.00
$ 604,000.00
$ 773,200.00
3.63
2.05
F
$ 76,500.00
$ 76,500.00
$ 76,500.00
Balance
$ 1,143,800.00
$ 370,600.00
$ 680,500.00
$ 773,200.00
3.09
1.84
G
$ 5,840.00
$ 5,840.00
Balance
$ 1,149,640.00
$ 370,600.00
$ 686,340.00
$ 779,040.00
3.10
1.85
H
$ 58,250.00
$ 58,250.00
Balance
$ 1,207,890.00
$ 428,850.00
$ 686,340.00
$ 779,040.00
2.82
1.60
I
$ (198,500.00)
$ (198,500.00)
$ (198,500.00)
Balance
$ 1,009,390.00
$ 230,350.00
$ 487,840.00
$ 779,040.00
4.38
2.12
J
$ (83,800.00)
$ (83,800.00)
Balance
$ 925,590.00
$ 230,350.00
$ 404,040.00
$ 695,240.00
4.02
1.75
K
$ (2,400.00)
$ (2,400.00)
Balance
$ 923,190.00
$ 230,350.00
$ 401,640.00
$ 692,840.00
4.01
1.74
L
$ -
$ -
$ -
Balance
$ 923,190.00
$ 230,350.00
$ 401,640.00
$ 692,840.00
4.01
1.74
1
working Capital
Current Assets
-
Current Liabilities
working Capital
$ 986,100.00
-
$ 411,700.00
$ 574,400.00
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.