I have asked for help 3 times on this question and so far nobody has been able t
ID: 2471926 • Letter: I
Question
I have asked for help 3 times on this question and so far nobody has been able to proivde me with the correct answers. Can someone help me? THe last question should have 3 different answers:
Data pertaining to the current position of Forte Company are as follows:
Cash
$440,000
Marketable securities
175,000
Accounts and notes receivable (net)
335,000
Inventories
700,000
Prepaid expenses
44,000
Accounts payable
180,000
Notes payable (short-term)
230,000
Accrued expenses
290,000
Required:
1.
Compute (A) the working capital
The excess of the current assets of a business over its current liabilities.
, (B) the current ratio
A financial ratio that is computed by dividing current assets by current liabilities.
, and (C) the quick ratio
A financial ratio that measures the ability to pay current liabilities with quick assets (cash, marketable securities, accounts receivable).
. Round ratios to one decimal place.
2.
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 of the table provided. 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, 80,000.
B.
Paid accounts payable, 120,000.
C.
Purchased goods on account, 130,000.
D.
Paid notes payable, 105,000.
E.
Declared a cash dividend, 140,000.
F.
Declared a common stock dividend on common stock, 50,000.
G.
Borrowed cash from bank on a long-term note, 200,000.
H.
Received cash on account, 140,000.
I.
Issued additional shares of stock for cash, 595,000.
J.
Paid cash for prepaid expenses, 12,000.
PLEASE HELP WITH THIS PART
2. 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 of the table provided. Consider each transaction separately and assume that only that transaction affects the data given. Round to one decimal place.
Working
Current
Quick
Transaction
Capital
Ratio
Ratio
A.
_____
____
____
B.
____
_____
____
C.
____
____
_____
D.
_____
____
____
E.
____
____
_____
F.
_____
_____
_____
G.
_____
_____
____
H.
_____
_____
_____
I.
_____
______
_______
J.
____
_____
______
Cash
$440,000
Marketable securities
175,000
Accounts and notes receivable (net)
335,000
Inventories
700,000
Prepaid expenses
44,000
Accounts payable
180,000
Notes payable (short-term)
230,000
Accrued expenses
290,000
Required:
1.
Compute (A) the working capital
The excess of the current assets of a business over its current liabilities.
, (B) the current ratio
A financial ratio that is computed by dividing current assets by current liabilities.
, and (C) the quick ratio
A financial ratio that measures the ability to pay current liabilities with quick assets (cash, marketable securities, accounts receivable).
. Round ratios to one decimal place.
2.
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 of the table provided. 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, 80,000.
B.
Paid accounts payable, 120,000.
C.
Purchased goods on account, 130,000.
D.
Paid notes payable, 105,000.
E.
Declared a cash dividend, 140,000.
F.
Declared a common stock dividend on common stock, 50,000.
G.
Borrowed cash from bank on a long-term note, 200,000.
H.
Received cash on account, 140,000.
I.
Issued additional shares of stock for cash, 595,000.
J.
Paid cash for prepaid expenses, 12,000.
Explanation / Answer
1.
(A)
Current assets = Cash + Marketable securities + Accounts and notes receivable (net) + Inventories + Prepaid expenses = $440,000 + $175,000 + $335,000 + $700,000 + $44,000 = $1,694,000
Current liabilities = Accounts payable + Notes payable (short-term) + Accrued expenses = $180,000 + $230,000 + $290,000 = $700,000
Working capital = Current assets – Current liabilities = $1,694,000 - $700,000 = $994,000
(B)
Current ratio = Current assets / Current liabilities = $1,694,000/$700,000 = 2.42
(C)
Quick assets = Cash + Marketable securities + Accounts and notes receivable (net) = $440,000 + $175,000 + $335,000 = $950,000
Quick ratio = Quick assets/Current liabilities = $950,000/$700,000 = 1.36
2.
Transaction
Current assets
Quick assets
Current liabilities
Working capital
Current ratio
Quick ratio
A
$ 1,694,000.00
$ 950,000.00
$ 700,000.00
$ 994,000.00
2.42
1.36
B
$ 1,574,000.00
$ 830,000.00
$ 580,000.00
$ 994,000.00
2.71
1.43
C
$ 1,824,000.00
$ 700,000.00
$ 830,000.00
$ 994,000.00
2.2
0.84
D
$ 1,589,000.00
$ 845,000.00
$ 595,000.00
$ 994,000.00
2.67
1.42
E
$ 1,694,000.00
$ 950,000.00
$ 840,000.00
$ 854,000.00
2.02
1.13
F
$ 1,694,000.00
$ 950,000.00
$ 750,000.00
$ 944,000.00
2.26
1.27
G
$ 1,714,000.00
$ 970,000.00
$ 700,000.00
$ 1,014,000.00
2.45
1.39
H
$ 1,694,000.00
$ 950,000.00
$ 700,000.00
$ 994,000.00
2.42
1.36
I
$ 2,289,000.00
$ 1,545,000.00
$ 700,000.00
$ 1,589,000.00
3.27
2.21
J
$ 1,694,000.00
$ 938,000.00
$ 700,000.00
$ 994,000.00
2.42
1.34
Transaction
Current assets
Quick assets
Current liabilities
Working capital
Current ratio
Quick ratio
A
$ 1,694,000.00
$ 950,000.00
$ 700,000.00
$ 994,000.00
2.42
1.36
B
$ 1,574,000.00
$ 830,000.00
$ 580,000.00
$ 994,000.00
2.71
1.43
C
$ 1,824,000.00
$ 700,000.00
$ 830,000.00
$ 994,000.00
2.2
0.84
D
$ 1,589,000.00
$ 845,000.00
$ 595,000.00
$ 994,000.00
2.67
1.42
E
$ 1,694,000.00
$ 950,000.00
$ 840,000.00
$ 854,000.00
2.02
1.13
F
$ 1,694,000.00
$ 950,000.00
$ 750,000.00
$ 944,000.00
2.26
1.27
G
$ 1,714,000.00
$ 970,000.00
$ 700,000.00
$ 1,014,000.00
2.45
1.39
H
$ 1,694,000.00
$ 950,000.00
$ 700,000.00
$ 994,000.00
2.42
1.36
I
$ 2,289,000.00
$ 1,545,000.00
$ 700,000.00
$ 1,589,000.00
3.27
2.21
J
$ 1,694,000.00
$ 938,000.00
$ 700,000.00
$ 994,000.00
2.42
1.34
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