Koto Corporation began the month of June with $300,000 of current assets, a current ratio of 2.5:1, and anacid-test ratio of 1.4:1. During the month, it completed the following transactions (the company uses aperpetual inventory system).June 1 Sold merchandise inventory that cost $75,000 for $120,000 cash.3 Collected $88,000 cash on an account receivable.5 Purchased $150,000 of merchandise inventory on credit.7 Borrowed $100,000 cash by giving the bank a 60-day, 10% note.10 Borrowed $120,000 cash by signing a long-term secured note.12 Purchased machinery for $275,000 cash.15 Declared a $1 per share cash dividend on its 80,000 shares of outstanding common stock.19 Wrote off a $5,000 bad debt against the Allowance for Doubtful Accounts account.22 Paid $12,000 cash to settle an account payable.30 Paid the dividend declared on June 15.RequiredPrepare a table, showing the company’s (1) current ratio, (2) acid-test ratio, and(3) working capital after each transaction. Round ratios to two decimals.
Koto Corporation began the month of June with $300,000 of current assets, a
acid-test ratio of 1.4:1. During the month, it completed the following transactions (the company uses a
perpetual inventory system).
June 1 Sold merchandise inventory that cost $75,000 for $120,000 cash.
3 Collected $88,000 cash on an account receivable.
5 Purchased $150,000 of merchandise inventory on credit.
7 Borrowed $100,000 cash by giving the bank a 60-day, 10% note.
10 Borrowed $120,000 cash by signing a long-term secured note.
12 Purchased machinery for $275,000 cash.
15 Declared a $1 per share cash dividend on its 80,000 shares of outstanding common stock.
19 Wrote off a $5,000
22 Paid $12,000 cash to settle an account payable.
30 Paid the dividend declared on June 15.
Required
Prepare a table, showing the company’s (1) current ratio, (2) acid-test ratio, and
(3)
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