Selected balance sheet accounts for Tibbetts Company on September 30, 2016, are

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Selected balance sheet accounts for Tibbetts Company on September 30, 2016, are as follows: Cash $ 44,800 Marketable securities 126,000 Accounts receivable, net 154,000 Inventory 175,000 Prepaid expenses 19,600 Total current assets $ 519,400 Accounts payable $ 108,000 Other accrued liabilities 26,400 Short-term debt 48,000 Total current liabilities $ 182,400 Required: a. Calculate the working capital, current ratio, and acid-test ratio for Tibbetts Company as of September 30, 2016. (Round "Ratio" answers to 2 decimal places.)
b. Summarized here are the transactions/events that took place during the fiscal year ended September 30, 2017. Credit sales for the year amounted to $336,000. The cost of goods sold was $218,400. Collected accounts receivable, $352,800. Purchased inventory on account, $235,200. Issued 700 shares of common stock for $25 per share. Wrote off $9,800 of uncollectible accounts using the allowance for bad debts. Declared and paid a cash dividend, $28,000. Sold marketable securities costing $36,400 for $43,400 in cash. Recorded insurance expense for the year, $16,800. The premium for the policy was paid in June 2016. Borrowed cash on a short-term bank loan, $14,000. Repaid principal of $56,000 and interest of $4,200 on a long-term bank loan. b-1. Prepare journal entries for the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Selected balance sheet accounts for Tibbetts Company on September 30, 2016, are as follows: Cash $ 44,800 Marketable securities 126,000 Accounts receivable, net 154,000 Inventory 175,000 Prepaid expenses 19,600 Total current assets $ 519,400 Accounts payable $ 108,000 Other accrued liabilities 26,400 Short-term debt 48,000 Total current liabilities $ 182,400 Required: a. Calculate the working capital, current ratio, and acid-test ratio for Tibbetts Company as of September 30, 2016. (Round "Ratio" answers to 2 decimal places.)
b. Summarized here are the transactions/events that took place during the fiscal year ended September 30, 2017. Credit sales for the year amounted to $336,000. The cost of goods sold was $218,400. Collected accounts receivable, $352,800. Purchased inventory on account, $235,200. Issued 700 shares of common stock for $25 per share. Wrote off $9,800 of uncollectible accounts using the allowance for bad debts. Declared and paid a cash dividend, $28,000. Sold marketable securities costing $36,400 for $43,400 in cash. Recorded insurance expense for the year, $16,800. The premium for the policy was paid in June 2016. Borrowed cash on a short-term bank loan, $14,000. Repaid principal of $56,000 and interest of $4,200 on a long-term bank loan. b-1. Prepare journal entries for the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Selected balance sheet accounts for Tibbetts Company on September 30, 2016, are as follows: Cash $ 44,800 Marketable securities 126,000 Accounts receivable, net 154,000 Inventory 175,000 Prepaid expenses 19,600 Total current assets $ 519,400 Accounts payable $ 108,000 Other accrued liabilities 26,400 Short-term debt 48,000 Total current liabilities $ 182,400 Required: a. Calculate the working capital, current ratio, and acid-test ratio for Tibbetts Company as of September 30, 2016. (Round "Ratio" answers to 2 decimal places.)
b. Summarized here are the transactions/events that took place during the fiscal year ended September 30, 2017. Credit sales for the year amounted to $336,000. The cost of goods sold was $218,400. Collected accounts receivable, $352,800. Purchased inventory on account, $235,200. Issued 700 shares of common stock for $25 per share. Wrote off $9,800 of uncollectible accounts using the allowance for bad debts. Declared and paid a cash dividend, $28,000. Sold marketable securities costing $36,400 for $43,400 in cash. Recorded insurance expense for the year, $16,800. The premium for the policy was paid in June 2016. Borrowed cash on a short-term bank loan, $14,000. Repaid principal of $56,000 and interest of $4,200 on a long-term bank loan. b-1. Prepare journal entries for the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Explanation / Answer

a. Working capital = Current assets - Current liabilities = $519400 - $182400 = $337000

Current ratio = Current assets/Current liabilities = $519400/$182400 = 2.85

Acid-test ratio = Quick assets/Current liabilities = ($44800 + $126000 + $154000)/$182400 = $324800/$182400 = 1.78

b-1.

No. Accounts and Explanations Debit Credit 1(a) Accounts receivable 336000 Sales revenue 336000 (To record credit sales) 1(b) Cost of goods sold 218400 Inventory 218400 (To record the cost of sales) 2 Cash 352800 Accounts receivable 352800 (To record collection on account) 3 Inventory 235200 Accounts payable 235200 (To record inventory purchased on account) 4 Cash 17500 Common stock (700 x $25) 17500 (To record common stock issued) 5 Allowance for bad debts 9800 Accounts receivable 9800 (To record write-off of uncollectible accounts) 6 Dividends 28000 Cash 28000 (To record cash dividend declared and paid) 7 Cash 43400 Marketable securities 36400 Realized gain on sale 7000 (To record sale of marketable securities) 8 Insurance expense 16800 Prepaid expenses 16800 (To record insurance expense) 9 Cash 14000 Short-term debt 14000 (To record short-term bank loan taken) 10 Long-term debt 56000 Interest expense 4200 Cash 60200 (To record repayment of long-term bank loan)

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