Determining the effects of business transactions on selected ratios
Financial statement data of Yankee Traveler’s Magazine include the following items:
Cash | $ 21,000 |
Accounts Receivable, Net | 82,000 |
Merchandise Inventory | 183,000 |
Total Assets | 634,000 |
Accounts Payable | 102,000 |
Accrued Liabilities | 38,000 |
Short-term Notes Payable | 46,000 |
Long-term Liabilities | 222,000 |
Net Income | 73,000 |
Common Shares Outstanding | 40,000 |
Requirements
1. Compute Yankee Traveler's
Current Ratio | Debt Ratio | Earnings per Share |
2. Compute the three ratios after evaluating the effect of each transaction that follows. Consider each transaction separately.
a. Purchased merchandise inventory of $42,000 on account.
b. Borrowed $123,000 on a long- term note payable.
c. Issued 4,000 shares of common stock, receiving cash of $106,000.
d. Received cash on account, $7,000.
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Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
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