Give the effect in terms of increase decrease or none item

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Reference no: EM13573842

Selected amounts from Reingold Company's balance sheet from the beginning of the year follow:


Cash	$	76,000
Marketable Securities	$	15,000
Accounts receivable, net	$	364,400
Inventory	$	475,600
Prepaid expenses	$	12,200
Plant and equipment, net	$	1,010,000
Accounts payable	$	210,800
Accrued liabilities	$	65,400
Notes due within one year	$	112,000
Bonds payable in five years	$	146,000

During the year, the company completed the following transactions:

x.	Purchased inventory on account, $54,500.
a.	Declared a cash dividend, $36,000.
b.	Paid accounts payable, $109,600.
c.	Collected cash on accounts receivable, $86,600.
d.	Purchased equipment for cash, $79,800.
e.	Paid a cash dividend previously declared, $36,000.
f.	Borrowed cash on a short-term note with the bank, $69,000.
g.	Sold inventory costing $74,800 for $106,000, on account.
h.	Wrote off uncollectible accounts in the amount of $12,400 reducing the accounts receivable balance accordingly.
i.	Sold marketable securities costing $15,000 for cash, $11,400.
j.	Issued additional shares of common stock for cash, $212,000.
k.	Paid off all short-term notes due, $181,000.

Required:

1.	Compute the following amounts and ratios as of the beginning of the year:

a.	Working capital.

Working capital

b.	Current ratio. (Round your answer to 2 decimal places.)

Current ratio

c.	Acid-test ratio. (Round your answer to 2 decimal places.)

Acid-test ratio

Indicate the effect of each of the transactions given above on working capital, the current ratio, and the acid-test ratio. Give the effect in terms of increase, decrease, or none. Item (x) is given as an example: Consider each transaction independently and indicate their effects as compared to the ratios and amounts at the beginning of the period.

		The Effect on
	Transaction	Working Capital	Current Ratio	Acid-Test Ratio
(x)	Purchased inventory on account	None	Decrease	Decrease
(a)	Declared a cash dividend	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone
(b)	Paid accounts payable	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone
(c)	Collected cash on accounts receivable	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone
(d)	Purchased equipment for cash	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone
(e)	Paid a cash dividend previously declared	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone
(f)	Borrowed cash on a short-term note with the bank	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone
(g)	Sold inventory on account at more than its cost	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone
(h)	Wrote off uncollectible accounts	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone
(i)	Sold marketable securities at less than its cost	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone
(j)	Issued additional shares of common stock for cash	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone
(k)	Paid off all short-term notes due	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone	(Click to select)IncreaseDecreaseNone

Reference no: EM13573842

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