In: Accounting
Denna Company’s working capital accounts at the beginning of the year follow:
Cash | $ | 68,000 |
Marketable securities | $ | 26,200 |
Accounts receivable, net | $ | 345,200 |
Inventory | $ | 454,800 |
Prepaid expenses | $ | 7,600 |
Accounts payable | $ | 196,400 |
Notes due within one year | $ | 96,000 |
Accrued liabilities | $ | 58,200 |
During the year, Denna Company completed the following transactions:
Paid a cash dividend previously declared, $28,000.
Issued additional shares of common stock for cash, $196,000.
Sold inventory costing $68,400 for $98,000, on account.
Wrote off uncollectible accounts in the amount of $9,200, reducing the accounts receivable balance accordingly.
Declared a cash dividend, $28,000.
Paid accounts payable, $96,800.
Borrowed cash on a short-term note with the bank, $57,000.
Sold inventory costing $20,100 for $13,400 cash.
Purchased inventory on account, $48,500.
Paid off all short-term notes due, $153,000.
Purchased equipment for cash, $73,400.
Sold marketable securities costing $16,200 for cash, $13,500.
Collected cash on accounts receivable, $77,800.
Required:
1. Compute the following amounts and ratios as of the beginning of the year:
a. Working capital.
b. Current ratio.
c. Acid-test ratio.