Question

In: Accounting

Balance sheet accounts for Thin Man Securities on 12/31/2017 are as follows: Cash                            &nbsp

Balance sheet accounts for Thin Man Securities on 12/31/2017 are as follows:

Cash                                                                       $106,000

Marketable Securities                                               374,000

Accounts Receivable, Net                                         240,000

Inventory                                                                 260,000

Prepaid Expenses                                                       42,000

            Total  Current Assets                                        $1,022,000

      Accounts Payable                                                      290,000

      Other Accrued Liabilities                                              75,000

      Short Term Debt                                                         130,000

            Total Current Liabilities                                    $ 495,000

A. Calculate the working capital, current ratio and acid test ratio for Thin Man Securities

B. In a separate set of calculations, show the “Total effect” of all the transactions below in a new balance sheet.  Then, recalculate the ratios calculated in A.

1. Credit sales for the year of $750,000, paid in cash

2. Collected Accounts Receivable of $45,000

3. Purchased Inventory on Account, $255,000

4. Issued 1000 shares of common stock at $20/share

5. Wrote off $25,000 of uncollectible accounts

6. Declared a cash dividend of $50,000

7. Paid the cash dividend of $50,000

8. Borrowed cash of $75,000 on a short-term Loan

Solutions

Expert Solution

for calculation of the new balances, refer to the image below -

ekkarill92 answered 2 years ago
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