In: Accounting
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