Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 14, Problem 14P
Effects of Transactions on Various Ratios
Denna Company's
During the year, Denna Company completed the following transactions:
Ex. Paid a cash dividend previously declared, $12,000.
a. Issued additional shares of common stock for cash, $100,000.
b. Sold inventory costing $50,000 for $80,000, on account.
c. Wrote off uncollectible accounts in the amount of $10,000, reducing the
d. Declared a cash dividend, $15,000.
e. Paid accounts payable, $50,000.
f. Borrowed cash on a short-term note with the bank, $35,000.
g. Sold inventory costing $15,000 for $10,000 cash.
h. Purchased inventory on account, $60,000.
i. Paid off all short-term notes due, $30,000.
j. Purchased equipment for cash, $15,000.
k. Sold marketable securities costing $18,000 for cash, $15,000.
l. Collected cash on accounts receivable, $80,000.
Required:
1. Compute the following amounts and ratios as of the beginning of the year:
a. Working capital.
b.
c. Acid-test ratio.
2. 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 Ex is given below as an example of the format to use:
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Denna Company’s working capital accounts at the beginning of the year follow:
Cash
$
64,000
Marketable securities
$
27,400
Accounts receivable, net
$
335,600
Inventory
$
444,400
Prepaid expenses
$
6,800
Accounts payable
$
189,200
Notes due within one year
$
88,000
Accrued liabilities
$
54,600
During the year, Denna Company completed the following transactions:
Ex. Paid a cash dividend previously declared, $24,000.
Issued additional shares of common stock for cash, $188,000.
Sold inventory costing $65,200 for $94,000, on account.
Wrote off uncollectible accounts in the amount of $7,600, reducing the accounts receivable balance accordingly.
Declared a cash dividend, $24,000.
Paid accounts payable, $90,400.
Borrowed cash on a short-term note with the bank, $51,000.
Sold inventory costing $21,300 for $14,200 cash.
Purchased inventory on account, $45,500.
Paid off all short-term notes due, $139,000.
Purchased equipment for cash, $70,200.
Sold…
Denna Company’s working capital accounts at the beginning of the year follow:
Cash
$ 69,000
Marketable securities
$ 25,900
Accounts receivable, net
$ 347,600
Inventory
$ 457,400
Prepaid expenses
$ 7,800
Accounts payable
$ 198,200
Notes due within one year
$ 98,000
Accrued liabilities
$ 59,100
During the year, Denna Company completed the following transactions:
Paid a cash dividend previously declared, $29,000.
Issued additional shares of common stock for cash, $198,000.
Sold inventory costing $69,200 for $99,000, on account.
Wrote off uncollectible accounts in the amount of $9,600, reducing the accounts receivable balance accordingly.
Declared a cash dividend, $29,000.
Paid accounts payable, $98,400.
Borrowed cash on a short-term note with the bank, $58,500.
Sold inventory costing $19,800 for $13,200 cash.
Purchased inventory on account, $49,250.
Paid off all short-term notes due, $156,500.
Purchased equipment for cash, $74,200.
Sold marketable securities…
Denna Company’s working capital accounts at the beginning of the year follow:
Cash
$ 69,000
Marketable securities
$ 25,900
Accounts receivable, net
$ 347,600
Inventory
$ 457,400
Prepaid expenses
$ 7,800
Accounts payable
$ 198,200
Notes due within one year
$ 98,000
Accrued liabilities
$ 59,100
During the year, Denna Company completed the following transactions:
Paid a cash dividend previously declared, $29,000.
Issued additional shares of common stock for cash, $198,000.
Sold inventory costing $69,200 for $99,000, on account.
Wrote off uncollectible accounts in the amount of $9,600, reducing the accounts receivable balance accordingly.
Declared a cash dividend, $29,000.
Paid accounts payable, $98,400.
Borrowed cash on a short-term note with the bank, $58,500.
Sold inventory costing $19,800 for $13,200 cash.
Purchased inventory on account, $49,250.
Paid off all short-term notes due, $156,500.
Purchased equipment for cash, $74,200.
Sold marketable securities…
Chapter 14 Solutions
Introduction To Managerial Accounting
Ch. 14 - Prob. 1QCh. 14 - What is the basic purpose for examining trends in...Ch. 14 - Prob. 3QCh. 14 - Prob. 4QCh. 14 - What is meant by the dividend yield on a common...Ch. 14 - What is meant by the term financial leverage?Ch. 14 - Prob. 7QCh. 14 - Prob. 8QCh. 14 - Prob. 9QCh. 14 - Markus Company’s common stock sold for $2.75 per...
Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Prob. 11F15Ch. 14 - Prob. 12F15Ch. 14 - Prob. 13F15Ch. 14 - Prob. 14F15Ch. 14 - Prob. 15F15Ch. 14 - Common-Size Income Statement A comparative income...Ch. 14 - Prob. 2ECh. 14 - Prob. 3ECh. 14 - Financial Ratios for Debt Management Refer to the...Ch. 14 - Prob. 5ECh. 14 - Prob. 6ECh. 14 - Prob. 7ECh. 14 - Prob. 8ECh. 14 - Financial Ratios for Assessing Profitability and...Ch. 14 - Prob. 10ECh. 14 - Prob. 11ECh. 14 - Selected Financial Measures for Assessing...Ch. 14 - Effects of Transactions on Various Financial...Ch. 14 - Effects of Transactions on Various Ratios Denna...Ch. 14 - Prob. 15PCh. 14 - Common-Size Financial StatementsRefer to the...Ch. 14 - Interpretation of Financial Ratios Pecunious...Ch. 14 - Common-Size Statements and Financial Ratios for a...Ch. 14 - Financial Ratios for Assessing Profitability and...
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