Question

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1. ffect of Transactions on A company's ability to pay its current liabilities.Current Position Analysis

   Data pertaining to the current position of Lucroy Industries Inc. follow:

   Cash	$417,500
   Marketable securities	190,000
   Accounts and notes receivable (net)	340,000
   Inventories	750,000
   Prepaid expenses	48,000
   Accounts payable	190,000
   Notes payable (short-term)	240,000
   Accrued expenses	315,000

   Required:

   1. Compute (a) the The excess of the current assets of a business over its current liabilities.working capital, (b) the A financial ratio that is computed by dividing current assets by current liabilities.current ratio, and (c) the A financial ratio that measures the ability to pay current liabilities with quick assets (cash, temporary investments, accounts receivable), computed as quick assets divided by current liabilities.quick ratio. Round ratios to one decimal place.

   a. Working capital	$
   b. Current ratio
   c. Quick ratio

   2. Compute the working capital, the current ratio, and the quick ratio after each of the following transactions and record the results in the appropriate columns. Consider each transaction separately and assume that only that transaction affects the data given. Round ratios to one decimal place.

   Transaction	Working Capital		Current Ratio		Quick Ratio
   a. Sold marketable securities at no gain or loss, $70,000.	$
   b. Paid accounts payable, $105,000.	$
   c. Purchased goods on account, $130,000.	$
   d. Paid notes payable, $110,000.	$
   e. Declared a cash dividend, $160,000.	$
   f. Declared a common stock dividend on common stock, $30,000.	$
   g. Borrowed cash from bank on a long-term note, $220,000.	$
   h. Received cash on account, $125,000.	$
   i. Issued additional shares of stock for cash, $565,000.	$
   j. Paid cash for prepaid expenses, $12,000.	$

Answer 1