Fundamentals of Financial Accounting
5th Edition
ISBN: 9780078025914
Author: Fred Phillips Associate Professor, Robert Libby, Patricia Libby
Publisher: McGraw-Hill Education
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Chapter 13, Problem 13.11E
To determine
The prevailing current ratio of Company AB
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In its most recent annual report, Appalachian Beverages reported current assets of $51,300 and a current ratio of 1.90. Assume that the following transactions were completed: (1) purchased merchandise for $5,700 on account and (2) purchased a delivery truck for $10,000, paying $2,000 cash and signing a two-year promissory note for the balance. Required:Compute the updated current ratio after each transaction, by showing the cumulative effects of the transactions in the following table. (Round your answers to 2 decimal places.)
In its most recent annual report, Appalachian Beverages reported current assets of $49,300 and a current
ratio of 1.70. Assume that the following transactions were completed: (1) purchased merchandise for $5,900
on account and (2) purchased a delivery truck for $10,000, paying $2,000 cash and signing a two-year
promissory note for the balance.
ts
Required:
Compute the updated current ratio after each transaction, by showing the cumulative effects of the
transactions in the following table. (Round your answers to 2 decimal places.)
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Hint
Current Ratio
Transaction (1)
Transaction (2)
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In its most recent annual report, Appalachian Beverages reported current assets of $54,000 and acurrent ratio of 1.80. Assume that the following transactions were completed: (1) purchased merchandise for $6,000 on account and (2) purchased a delivery truck for $10,000, paying $1,000 cashand signing a two-year promissory note for the balance.Required:Compute the updated current ratio, rounded to two decimal places, after each transaction.
Chapter 13 Solutions
Fundamentals of Financial Accounting
Ch. 13 - What is the general goal of trend analysis?Ch. 13 - Prob. 2QCh. 13 - What is ratio analysis? Why is it useful?Ch. 13 - What benchmarks are commonly used for interpreting...Ch. 13 - Prob. 5QCh. 13 - Prob. 6QCh. 13 - Slow Cellars current ratio increased from 1.2 to...Ch. 13 - From last year to this year, Colossal Companys...Ch. 13 - From last year to this year, Berry Bam reported...Ch. 13 - Explain whether the following situations, taken...
Ch. 13 - What are the two essential characteristics of...Ch. 13 - Prob. 12QCh. 13 - Prob. 13QCh. 13 - Prob. 14QCh. 13 - Prob. 15QCh. 13 - Prob. 16QCh. 13 - 1. Which of the following ratios is not used to...Ch. 13 - Prob. 2MCCh. 13 - Prob. 3MCCh. 13 - Analysts use ratios to a. Compare different...Ch. 13 - Which of the following ratios incorporates stock...Ch. 13 - Prob. 6MCCh. 13 - Prob. 7MCCh. 13 - A bank is least likely to use which of the...Ch. 13 - Prob. 9MCCh. 13 - (Supplement 13A) Which of the following items is...Ch. 13 - Calculations for Horizontal Analyses Using the...Ch. 13 - Calculations for Vertical Analyses Refer to M13-1....Ch. 13 - Interpreting Horizontal Analyses Refer to the...Ch. 13 - Interpreting Vertical Analyses Refer to the...Ch. 13 - Prob. 13.5MECh. 13 - Prob. 13.6MECh. 13 - Prob. 13.7MECh. 13 - Analyzing the Inventory Turnover Ratio A...Ch. 13 - Inferring Financial Information Using the Current...Ch. 13 - Prob. 13.10MECh. 13 - Identifying Relevant Ratios Identify the ratio...Ch. 13 - Prob. 13.12MECh. 13 - Analyzing the Impact of Accounting Alternatives...Ch. 13 - Describing the Effect of Accounting Decisions on...Ch. 13 - Prob. 13.1ECh. 13 - Prob. 13.2ECh. 13 - Prob. 13.3ECh. 13 - Computing Profitability Ratios Use the information...Ch. 13 - Prob. 13.5ECh. 13 - Matching Each Ratio with Its Computational Formula...Ch. 13 - Computing and Interpreting Selected Liquidity...Ch. 13 - Prob. 13.8ECh. 13 - Prob. 13.9ECh. 13 - Prob. 13.10ECh. 13 - Prob. 13.11ECh. 13 - Prob. 13.12ECh. 13 - Prob. 13.13ECh. 13 - Prob. 13.14ECh. 13 - Analyzing the Impact of Alternative Inventory...Ch. 13 - Prob. 13.1CPCh. 13 - Analyzing Comparative Financial Statements Using...Ch. 13 - Prob. 13.3CPCh. 13 - Prob. 13.4CPCh. 13 - Prob. 13.5CPCh. 13 - Prob. 13.6CPCh. 13 - Prob. 13.7CPCh. 13 - Prob. 13.1PACh. 13 - Analyzing Comparative Financial Statements Using...Ch. 13 - Prob. 13.3PACh. 13 - Prob. 13.4PACh. 13 - Interpreting Profitability, Liquidity, Solvency,...Ch. 13 - Using Ratios to Compare Loan Requests from Two...Ch. 13 - Prob. 13.7PACh. 13 - Prob. 13.1PBCh. 13 - Prob. 13.2PBCh. 13 - Prob. 13.3PBCh. 13 - Prob. 13.4PBCh. 13 - Interpreting Profitability, Liquidity, Solvency,...Ch. 13 - Using Ratios to Compare Loan Requests from Two...Ch. 13 - Prob. 13.7PBCh. 13 - Prob. 13.1SDCCh. 13 - Prob. 13.2SDCCh. 13 - Prob. 13.5SDCCh. 13 - Prob. 13.6SDCCh. 13 - Prob. 13.7SDCCh. 13 - Prob. 13.1CC
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- View the data below and then answer the question below: Company Name: WaitRose Sales - $2,100 (20% cash, 80% credit) Inventory - $750 Depreciation - $1,500 Plant & Equipment - $2,000 Accounts Receivable - $225 Notes Payable - $165 Question: What is the average collection period for the year for Waitrose? (show your work and explain)arrow_forwardCurrent assets for JC Inc. totalled $32,571, and the current ratio was 1.41. Assume that the following transactions were completed: (1) Purchased merchandise for $5,800 on short-term credit. (2) Purchased a delivery truck for $10,000-paid $2,890 cash and signed a two-year interest-bearing note for the balance. Required: 1. Determine without computations if the current ratio will increase, decrease, or remain unchanged after each transaction. Transaction (1) Transaction (2) Impact on Current Ratio 2. Compute the current ratio after each transaction. (Round the final answers to 2 decimal places.) Transaction (1) Transaction (2) Current Ratioarrow_forwardThe following selected information is taken from the financial statements of Arnn Company for its most recent year of operations: During the year, Arnn had net sales of 2.45 million. The cost of goods sold was 1.3 million. Required: Note: Round all answers to two decimal places. 1. Compute the current ratio. 2. Compute the quick or acid-test ratio. 3. Compute the accounts receivable turnover ratio. 4. Compute the accounts receivable turnover in days. 5. Compute the inventory turnover ratio. 6. Compute the inventory turnover in days.arrow_forward
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