Question

Financial statement data for Jenkins, Inc. include the following items:
Cash						$22,000
Short-term investments						33,000
Accounts receivable, net						87,000
Inventories						145,000
Prepaid expenses						9,000
Total assets						$675,000
Short-term note payable						$44,000
Accounts payable						102,000
Accrued liabilities						37,000
Long-term notes payable						162,000
Other long-term liabilities						32,000
Net Income						$95,000
Number of common shares outstanding						50,000
Requirements:
1. Calculate Jenkins, Inc. Current ratio, debt ratio and earnings per share.
Round all ratios to decimal places.
2. Calculate the three ratios after evaluating the effect of each transaction that follows.
Consider each transaction separately.
(a) Borrowed $140,000 on a long-term note payable
(b) On January 1, issued 30,000 shares of common stock, receiving cash of $367,000
(c ) Paid off short-term notes payable, $27,000.
(d) Purchased $41,000 of merchandise on account, debiting inventory
(e ) Received cash on account, $15,000

Answer 1