Question

In: Accounting

Selected balance sheet accounts for Tibbetts Company on September 30, 2019, are as follows: Cash $...

Selected balance sheet accounts for Tibbetts Company on September 30, 2019, are as follows:

Cash $ 41,600
Marketable securities 117,000
Accounts receivable, net 143,000
Inventory 162,500
Prepaid expenses 18,200
Total current assets $ 482,300
Accounts payable $ 81,000
Other accrued liabilities 19,800
Short-term debt 36,000
Total current liabilities $ 136,800

Required:

  1. Calculate the working capital, current ratio, and acid-test ratio for Tibbetts Company as of September 30, 2019.
  2. Summarized here are the transactions/events that took place during the fiscal year ended September 30, 2020. Prepare journal entries for the below transactions and Indicate the effect of each item on Tibbetts Company's working capital, current ratio, and acid-test ratio. Use + for increase, − for decrease, and (NE) for no effect.
    1. Credit sales for the year amounted to $312,000. The cost of goods sold was $202,800.
    2. Collected accounts receivable, $327,600.
    3. Purchased inventory on account, $218,400.
    4. Issued 650 shares of common stock for $23 per share.
    5. Wrote off $9,100 of uncollectible accounts using the allowance for bad debts.
    6. Declared and paid a cash dividend, $26,000.
    7. Sold marketable securities costing $33,800 for $40,300 in cash.
    8. Recorded insurance expense for the year, $15,600. The premium for the policy was paid in June 2019.
    9. Borrowed cash on a short-term bank loan, $13,000.
    10. Repaid principal of $52,000 and interest of $3,900 on a long-term bank loan.

Solutions

Expert Solution

Working Capital:

Current Assets - Current Liabilities = 482300 - 136800 = 345500

Working Capital ratio:

Current Assets / Current Liabilities = 482300/136800 = 3.53

Acid Test Ratio (ATR):

Liquid Current Assets / Current Liabilities

Liquid Current Assets here are :

  • Cash
  • Marketable securities
  • Accounts receivable, net

Therefore Liquid Current Asset Total = 41600 + 117000 + 143000 = 301600

ATR = 301600 / 136800 = 2.20

JOURNAL with corresponding Impacts on Ratios:

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Selected balance sheet accounts for Tibbetts Company on September 30, 2019, are as follows: Cash $...
Selected balance sheet accounts for Tibbetts Company on September 30, 2019, are as follows: Cash $ 32,000 Marketable securities 90,000 Accounts receivable, net 110,000 Inventory 125,000 Prepaid expenses 14,000 Total current assets $ 371,000 Accounts payable $ 90,000 Other accrued liabilities 22,000 Short-term debt 40,000 Total current liabilities $ 152,000 Required: Calculate the working capital, current ratio, and acid-test ratio for Tibbetts Company as of September 30, 2019. Summarized here are the transactions/events that took place during the fiscal year...
Selected balance sheet accounts for Tibbetts Company on September 30, 2016, are as follows: Cash $...
Selected balance sheet accounts for Tibbetts Company on September 30, 2016, are as follows: Cash $ 44,800 Marketable securities 126,000 Accounts receivable, net 154,000 Inventory 175,000 Prepaid expenses 19,600 Total current assets $ 519,400 Accounts payable $ 99,000 Other accrued liabilities 24,200 Short-term debt 44,000 Total current liabilities $ 167,200 a. Calculate the working capital, current ratio, and acid-test ratio for Tibbetts Company as of September 30, 2016. (Round "Ratio" answers to 2 decimal places.) b. Summarized here are the...
Selected balance sheet accounts for Tibbetts Company on September 30, 2016, are as follows: Cash $...
Selected balance sheet accounts for Tibbetts Company on September 30, 2016, are as follows: Cash $ 44,800 Marketable securities 126,000 Accounts receivable, net 154,000 Inventory 175,000 Prepaid expenses 19,600 Total current assets $ 519,400 Accounts payable $ 108,000 Other accrued liabilities 26,400 Short-term debt 48,000 Total current liabilities $ 182,400 Required: a. Calculate the working capital, current ratio, and acid-test ratio for Tibbetts Company as of September 30, 2016. (Round "Ratio" answers to 2 decimal places.) b. Summarized here are...
Effect on transactions on liquidity measures Selected balance sheet accounts for Tibbets Company on September 30,...
Effect on transactions on liquidity measures Selected balance sheet accounts for Tibbets Company on September 30, 2019, are as follows: Cash $48,000.00 Marketable securities 87,000 Accounts receivable, net 129,000 Inventory 135,000 Prepaid expenses 21,000 total current assets $420,000.00 Accounts Payable $147,000.00 Other accrued liabilities 33,000 Short-term debt 60,000 total current liabilities $240,000.00 Required: a. Calculate the working capital, current ratio, and acid-test ratio for Tibbetts Company as of Sep 30,2019 b. Summarized here are the transactions/events that took place during...
Effect on transactions on liquidity measures Selected balance sheet accounts for Tibbets Company on September 30,...
Effect on transactions on liquidity measures Selected balance sheet accounts for Tibbets Company on September 30, 2019, are as follows: Cash $48,000.00 Marketable securities 87,000 Accounts receivable, net 129,000 Inventory 135,000 Prepaid expenses 21,000 total current assets $420,000.00 Accounts Payable $147,000.00 Other accrued liabilities 33,000 Short-term debt 60,000 total current liabilities $240,000.00 Required: a. Calculate the working capital, current ration, and acid-test ratio for Tibbetts Company as of Sep 30,2019 b. Summarized here are the transactions/events that took place during...
On September 30, Hilltop Company's selected payroll accounts are as follows: FICA Taxes Payable: Sep. 30...
On September 30, Hilltop Company's selected payroll accounts are as follows: FICA Taxes Payable: Sep. 30 $2,314.84 (employer) and Sep. 30 $2,314.84 (employee) State Unemployment Tax Payable: Sep. 30 $1,183.40 Federal Unemployment Tax Payable: Sep. 30 $575.32 Employees' Federal Income Tax Payable: Sep. 30 $3,210.85 Prepare general journal entries to record the following: Oct. 15 Payment of federal tax deposit of FICA taxes and the federal income tax. Oct. 31 Payment of state unemployment tax. Oct. 31 Payment of federal...
At September 1, the balance sheet accounts for Debbie’s Restaurant were as follows: Account payable $...
At September 1, the balance sheet accounts for Debbie’s Restaurant were as follows: Account payable $ 3,800 Land $ 33,000 Account Receivable 1,600 Debbie Capital ?? Building 68,000 Notes Payable 48,000 Cash 10,000 Furniture 18,700 Supplies 6,600 The following transactions occurred during the next two days: Debbie invested an additional $22,000 cash in the business. The accounts payable were paid in full. (No payment was made on the notes payable.) Required: Prepare a balance sheet at September 3, 2015.
The draft accounts for the year ended 30 June 2019 and a balance sheet as at...
The draft accounts for the year ended 30 June 2019 and a balance sheet as at that date for W. Willow are submitted to you. Towards the end of the financial year, her accountant resigned and she had completed the records herself. She thinks that errors have occurred and asks for your help. An examination of the accounting records reveals the following. W. Willow is registered for GST. Required: (a) Show the journal entries required to make the necessary adjustments....
West Laboratory provides service The trial balance at 30 September 2019, before adjustments is as follows:...
West Laboratory provides service The trial balance at 30 September 2019, before adjustments is as follows: Debit Credit Cash $174,450 Accounts Receivable 17,000 Prepaid Rent 28,000 Prepaid insurance 1,600 Supplies inventory 2,400 Equipment 183,600 Accumulated Depreciation: Equipment $68,850 Accounts Payable 18,100 Unearned revenue 14,000 Share Capital 200,000 Retained Earnings 44,700 Revenue 371,000 Salaries Expense 200,000 Rent expense 56,000 Insurance expense 3,200 Utilities Expense 9,600 Depreciation Expense       40,800               $716,650 $716,650 The following information relates to month end adjustments: The...
Barry Computer Company: Balance Sheet as of December 31, 2019 (In Thousands) Cash $ 44,950 Accounts...
Barry Computer Company: Balance Sheet as of December 31, 2019 (In Thousands) Cash $ 44,950 Accounts payable $ 143,840 Receivables 323,640 Other current liabilities 134,850 Inventories 269,700 Notes payable to bank 71,920    Total current assets $ 638,290    Total current liabilities $ 350,610 Long-term debt 197,780 Net fixed assets 260,710 Common equity (35,061 shares) 350,610 Total assets $ 899,000 Total liabilities and equity $ 899,000 Barry Computer Company: Income Statement for Year Ended December 31, 2019 (In Thousands) Sales $ 1,550,000...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT