Question

Hitaki Sales Inc. began the month of July with $562,500 of current assets, a current ratio of 2.25:1, and an acid-test ratio of 1.00:1. During the month, it completed the following transactions (the company uses a perpetual inventory system).

(PLEASE SHOW SOME OF YOUR WORK SO IT IS EASIER TO FOLLOW, THANK YOU)

July      3        Purchased $67,500 of merchandise inventory on credit.

            10        Sold merchandise inventory that cost $75,000 for $120,000 cash.

            12        Collected $40,000 cash on an account receivable.

            14        Paid $32,000 cash to settle an account payable.

            16        Wrote off a $10,000 bad debt against the Allowance for Doubtful Accounts.

            20        Declared a $2 per share cash dividend on its 30,000 shares of outstanding common stock.

            22        Paid the dividend declared on July 22.

24        Borrowed $75,000 cash by giving the bank a 90-day, 6% note.

            26        Borrowed $75,000 cash by signing a long-term secured note.

            27        Used the $80,000 cash proceeds from the notes to buy new machinery.

Prepare a table showing Kiwi Java Time’s (1) current ratio, (2) acid-test ratio, and (3) working capital, after each transaction. Round ratios to two decimals.

Transaction                  Current           Quick                Current            Current          Acid-Test             Working

                                       Assets           Assets              Liabilities         Ratio                Ratio                 Capital

Beginning                   

July 3                           ________________________________________                                                                  .                              

Balance                       

July 10                        

                                    ______________                                                                                                             .

Balance                       

July 12                        

                                                                                                                                           .

Balance                       

July 14                                                                                                                                                                      .

Balance                       

July 16                                                                                                                                                                   .

Balance                       

July 20                                                                                                                                                                  .

Balance                       

July 22                                                                                                                                                                    .

Balance                       

July 24                                                                                                                                                                    .

Balance                       

July 26                                                                                                                                                                    .

Balance                                 

July 27                                                                                                                                                                   .

Balance                                                                                                                                                                    .

                       

Answer 1