Denna Company\'s working capital accounts at the beginning of the year follow: 5
ID: 2500925 • Letter: D
Question
Denna Company's working capital accounts at the beginning of the year follow: 5 77,000 S 23,200 S 388,800 S 478,200 S 12,900 S 212,800 S 114,000 5 8,300 Accounts receivable, net Prepaid expenses Accounts payable Notes due within one year Accrued liabilities During the year, Denna Company completed the following transactions: x. Paid a cash dividend previously declared, $37,000. a. Issued additional shares of common stock for cash, $214,000. b. Sold inventory costing $75,800 for 107,000, on account. c. Wrote off uncollectible accounts in the amount of $12,800, reducing the accounts receivable balance accordingly d. Declared a cash dividend, $37,000. e. Paid accounts payable, $111,200. f. Borrowed cash on a short-term note with the bank, $70,500 g. Sold inventory costing $18,880 for $11, 120 cash. h. Purchased inventory on account, $55,250 i. Paid off all short-term notes due, $184,500 j. Purchased equipment for cash, $80,600. k. Sold marketable securities costing $13,200 for cash, 511,000. l. Collected cash on accounts receivable, $87,700. 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
= $958,100 - $392,900
= $565,200
Current Ratio = Current Assets/ Current Liabilities
=$958,100 / $392,900
= 2.43
Acid-Test Ratio = Cash Equivalents + Marketable Securitie+ Net Receivables / Current Liabilities
= $77,000+$23,200+$366,800 / $392,900
=$467,000 / $392,900
=1.19
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Current Assets: Cash $77,000 Marketable Securities $23,200 Accounts Receivable $366,800 Inventory $478,200 Prepaid Expenses $12,900 Total Current Assets $958,100 Current Liabilities: Accounts Payable $212,600 Notes Payable $114,000 Accured Libilities $66,300 Total Current Liabilities $392,900Related Questions
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