Managerial Accounting
3rd Edition
ISBN: 9780077826482
Author: Stacey M Whitecotton Associate Professor, Robert Libby, Fred Phillips Associate Professor
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 13, Problem 14E
Analyzing the Impact of Selected Transactions on the
A company has current assets that total $500,000, has a current ratio of 2.00, and uses the perpetual inventory method. Assume that the following transactions are then completed: (1) sold $12,000 in merchandise on short-term credit for $15,000, (2) declared but did not pay dividends of $50.000. (3) paid prepaid relit in the amount of $2,000, (4) paid previously declared dividends in the amount of $50.000, (5) collected an
Required:
Compute the updated current ratio, rounded to two decimal places, after each transaction.
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Directions: Below is the summarized financial information of Redz Company. Compute the following. Write
your answers on a separate sheet of paper.
1.
Average Inventory
Average Receivable
Average Payable
Inventory Turnover Ratio
Days of Inventories
Receivables Turnover Ratio
Days of Receivable
Payables Turnover Ratio
2.
3.
4.
3.
6.
785
7.
8.
9. Days of Payable
10. Operating Cycle
Beginnine.
Php 2.000,000.00
Php 1,150.000.00
Php 300.000,00
Php 10,000,0000,00
Php 6,5 00.000.00
Ending
Php 3.100,000.00
Php 2.000,000.00
Php 18 00.000.00
Accounts
Inventory
Accournts Receivable
Accouits Paynble
Net Sales
Cost of CGoods9 Sold
Assuming a company’s year-end inventory were overstated by $5,000, indicate the effect(overstated/understated/no effect) of the error on the following balance sheet and income statement accounts.A. Income Statement: Cost of Goods SoldB. Income Statement: Net IncomeC. Balance Sheet: AssetsD. Balance Sheet: LiabilitiesE. Balance Sheet: Equity
A company has current assets that total $500,000, has a current ratio of 2.00, and uses the perpetual inventory method. Assume that the following transactions are then completed: (1) sold$12,000 in merchandise on short-term credit for $15,000, (2) declared but did not pay dividendsof $50,000, (3) paid prepaid rent in the amount of $12,000, (4) paid previously declared dividends in the amount of $50,000, (5) collected an account receivable in the amount of $12,000,and (6) reclassified $40,000 of long-term debt as a current liability.Required:Compute the updated current ratio, rounded to two decimal places, after each transaction.
Chapter 13 Solutions
Managerial Accounting
Ch. 13 - Prob. 1QCh. 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 - Why are some analyses called horizontal and others...Ch. 13 - Slow Cellar’s current ratio increased from 1.2 to...Ch. 13 - From last year to this year. Colossal Company’s...Ch. 13 - From last year to this year, Berry Barn reported...Ch. 13 - Prob. 10Q
Ch. 13 - Prob. 1MCCh. 13 - Prob. 2MCCh. 13 - Prob. 3MCCh. 13 - Prob. 4MCCh. 13 - Prob. 5MCCh. 13 - Prob. 6MCCh. 13 - Prob. 7MCCh. 13 - Prob. 8MCCh. 13 - Prob. 9MCCh. 13 - Prob. 1MECh. 13 - Prob. 2MECh. 13 - Prob. 3MECh. 13 - Prob. 4MECh. 13 - Prob. 5MECh. 13 - Prob. 6MECh. 13 - Prob. 7MECh. 13 - Prob. 8MECh. 13 - Prob. 9MECh. 13 - Prob. 10MECh. 13 - Prob. 11MECh. 13 - Prob. 12MECh. 13 - Prob. 13MECh. 13 - Prob. 14MECh. 13 - Prob. 1ECh. 13 - Prob. 2ECh. 13 - Prob. 3ECh. 13 - Prob. 4ECh. 13 - Prob. 5ECh. 13 - Prob. 6ECh. 13 - Prob. 7ECh. 13 - Computing and Interpreting Liquidity Ratios...Ch. 13 - Prob. 9ECh. 13 - Prob. 10ECh. 13 - Prob. 11ECh. 13 - Prob. 12ECh. 13 - Prob. 13ECh. 13 - Analyzing the Impact of Selected Transactions on...Ch. 13 - Prob. 15ECh. 13 - Prob. 1.1GAPCh. 13 - Prob. 1.2GAPCh. 13 - Prob. 2.1GAPCh. 13 - Prob. 2.2GAPCh. 13 - Prob. 2.3GAPCh. 13 - Prob. 2.4GAPCh. 13 - Prob. 2.5GAPCh. 13 - Prob. 2.6GAPCh. 13 - Prob. 2.7GAPCh. 13 - Prob. 2.8GAPCh. 13 - Prob. 3.1GAPCh. 13 - Prob. 3.2GAPCh. 13 - Prob. 3.3GAPCh. 13 - Prob. 4.1GAPCh. 13 - Prob. 4.2GAPCh. 13 - Prob. 4.3GAPCh. 13 - Prob. 5.1GAPCh. 13 - Prob. 5.2GAPCh. 13 - Prob. 5.3GAPCh. 13 - Prob. 5.4GAPCh. 13 - Prob. 6.1GAPCh. 13 - Prob. 6.2GAPCh. 13 - Prob. 7GAPCh. 13 - Prob. 1.1GBPCh. 13 - Prob. 1.2GBPCh. 13 - Prob. 2.1GBPCh. 13 - Prob. 2.2GBPCh. 13 - Prob. 2.3GBPCh. 13 - Prob. 2.4GBPCh. 13 - Prob. 2.5GBPCh. 13 - Prob. 2.6GBPCh. 13 - Prob. 2.7GBPCh. 13 - Prob. 2.8GBPCh. 13 - Prob. 3.1GBPCh. 13 - Prob. 3.2GBPCh. 13 - Prob. 3.3GBPCh. 13 - Prob. 4.1GBPCh. 13 - Prob. 4.2GBPCh. 13 - Prob. 4.3GBPCh. 13 - Prob. 5.1GBPCh. 13 - Prob. 5.2GBPCh. 13 - Prob. 5.3GBPCh. 13 - Prob. 5.4GBPCh. 13 - Prob. 6.1GBPCh. 13 - Prob. 6.2GBPCh. 13 - Prob. 7GBP
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- Inventory Analysis Singleton Inc. reported the following information for the current year: Required: Compute Singletons (a) gross profit ratio, (b) inventory turnover ratio, and (c) average days to sell inventory. (Note: Round all answers to two decimal places.)arrow_forwardAnalyzing the Accounts Casey Company uses a perpetual inventory system and engaged in the following transactions: a. Made credit sales of $825,000. The cost of the merchandise sold was $560,000. b. Collected accounts receivable in the amount of $752,600. c. Purchased goods on credit in the amount of $574,300. d. Paid accounts payable in the amount of $536,200. Required: Prepare the journal entries necessary to record the transactions. Indicate whether each transaction increased cash, decreased cash, or had no effect on cash.arrow_forwardInventory Analysis Callahan Company reported the following information for the current year. Required: 1. Compute Callahans (a) gross profit ratio, (b) inventory turnover ratio, and (c) average days to sell inventory. (Round all answers to two decimal places.) 2. Explain the meaning of each number.arrow_forward
- Compute Altoona Companys (a) inventory turnover ratio and (b) number of days sales in inventory ratio, using the following information.arrow_forwardInventory analysis A company reports the following: Determine (a) the inventory turnover and (b) the number of days sales in inventory. Round to one decimal place.arrow_forwardCompute Westtown Companys (A) inventory turnover ratio and (B) number of days sales in inventory ratio, using the following information.arrow_forward
- Use the weighted-average (AVG) cost allocation method, with perpetual inventory updating, to calculate (a) sales revenue, (b) cost of goods sold, and c) gross margin for A75 Company, considering the following transactions.arrow_forwardUse the last-in, first-out (LIFO) cost allocation method, with perpetual inventory updating, to calculate (a) sales revenue, (b) cost of goods sold, and c) gross margin for A75 Company, considering the following transactions.arrow_forwardCurrent assets for Clarke Inc. totalled $1,121,400, the current ratio was 2.00, and the company uses the periodic inventory method. Assume that the following transactions were completed: (1) Sold $28,035 in merchandise on account. (2) Declared but did not pay dividends of $41,700. (3) Paid rent in advance in the amount of $25,500. (4) Paid previously declared dividends in the amount of $41,700. (5) Collected a accounts receivable in the amount of $28,000. (6) Reclassified $70,300 of long-term debt as a short-term liability. Required: Assume that Clarke's Inc. uses periodic inventory system, compute the current ratio after each transaction. (Round the final answers to 2 decimal places.) Transaction (1) Transaction (2) Transaction (3) Transaction (4) Transaction (5) Transaction (6) Current Ratioarrow_forward
- Please complete the balance sheet using the ratios that have been provided below. Inventory Turnover = Cost of Goods Sold/Inventory Hint: Sales – COSG = Gross Profit SHOW YOUR WORK!!! Cash $200,000 Accounts Payable $100,000 Marketable Sec. $100,000 Acct Rec ________ Notes Payable _______ Inventories ________ Accruals $100,000 Total Current Assets ________ Total Current Liabilities ________ Gross Fixed Assets $4,000,000 Less: Accum Dep. _________ Long Term Debt _________ Net Fixed Assets $ 3,400,000 Stockholders Equity 4,800,000 Other Assets _________ Total Assets $ ________ Total Liabilities and Equity $________ RATIOS Sales $4,000,000 Gross Profit…arrow_forward10 A company has current assets that total $594,000, has a current ratio of 2.20, and uses the perpetual inventory method. Assume that the following transactions are then completed: (1) sold $12,200 in merchandise on short-term credit for $15,400, (2) declared but did not pay dividends of $52,000, (3) paid prepaid rent in the amount of $10,800, (4) paid previously declared dividends in the amount of $52,000, (5) collected an account receivable in the amount of $12,200, and (6) reclassified $43,000 of long-term debt as a current liability. ts еВook 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.) Hint Current Ratio Print Transaction (1) Transaction (2) ferences Transaction (3) Transaction (4) Transaction (5) Transaction (6)arrow_forwardon a comparative balance sheet we have: inventory Prior year: 47 million Inventory current year: 49 million Accounts Payable prior year: 30 accounts payable current year: 27 * all inventory is purchased on account, and the Accounts Payable is used exclusively for inventory purchases. *make a t-chart for each account * what would be the journal entry to support the operating activityarrow_forward
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