Date pertaining to the current position of Sprice Pine MedicalCompany are as fol

Question

Date pertaining to the current position of Sprice Pine MedicalCompany are as follows: Cash                                                   384,000 Marketsecurities                                176,000 Accounts and notes receivable(net)     608,000 Inventories                                          792,000 Prepaidexpenses                                   48,000 Accountspayable                                624,000 Notes payable(short-term)                  240,000 Accruedexpenses                                    80,000 Compute (a) the working capital,(b) the current ratio, and (c)the quick ratio. Round to one decimal place. list the following captions: transactions workingcapital currentratio     quick ratio Compute the working capital, the current ratio and the quickratio after each of the following transactions and record theresult in the appropriate column. Consider each transactionseperately and assume that only, that transaction affects the datagiven above. Date pertaining to the current position of Sprice Pine MedicalCompany are as follows: Cash                                                   384,000 Marketsecurities                                176,000 Accounts and notes receivable(net)     608,000 Inventories                                          792,000 Prepaidexpenses                                   48,000 Accountspayable                                624,000 Notes payable(short-term)                  240,000 Accruedexpenses                                    80,000 Compute (a) the working capital,(b) the current ratio, and (c)the quick ratio. Round to one decimal place. list the following captions: transactions workingcapital currentratio     quick ratio Compute the working capital, the current ratio and the quickratio after each of the following transactions and record theresult in the appropriate column. Consider each transactionseperately and assume that only, that transaction affects the datagiven above. Compute the working capital, the current ratio and the quickratio after each of the following transactions and record theresult in the appropriate column. Consider each transactionseperately and assume that only, that transaction affects the datagiven above.

Explanation / Answer

$944,000

2.1

1.2

a. Working Capital  = Current assets - Currentliabilities Current assets    = Cash + Market securities + A/R + Inventories +Prepaid expenses $384,000 +176,000 +608,000 +792,000 +48,000 $2,008,000 Current Liabilities = A/P +N/P + Accrued expenses $624,000 + 240,000 +80,000

$944,000

Working Capital   = $208,000 - $944,000          = $1,064,000 b. Current Ratio   = Current assets / Currentliabilities $208,000 / $944,000

2.1

c. Quick Ratio     = Liquid assets / Currentliabilities Liquid Assets   = Cash + Market securities + A/R $384,000 +176,000 +608,000 $1,168,000 Quick Ratio      = $1,168,000 / $944,000

1.2

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