Data pertaining to the current position of Forte Company are as follows Cash Mar
ID: 2532688 • Letter: D
Question
Data pertaining to the current position of Forte Company are as follows Cash Marketable securities Accounts and notes receivable (net) Inventories Prepaid expenses Accounts payable Notes payable (short-term) Accrued expenses $442,500 165,000 320,000 700,000 40,000 190,000 260,000 315,000 Required 1. Compute (A) the working capital, (B) the current ratio, and (C) the guick ratio Round ratios to one decimal place 2. Compute the working capital, the current ratio, and the quick ratio after each of the following transactions, and record the resuits in the appropriate columns of the table provided. Consider each transaction separately and assume that only that transaction affects the data given. Round to one decimal place A. Sold marketable securities at no gain or loss, 55,000. B. Paid accounts payable, 140,000 C. Purchased goods on account, 115,000 D. Paid notes payable, 110,000 E. Declared a cash dividend, 135,000 F. Declared a common stock dividend on common stock, 55,000 G. Borrowed cash from bank on a long-term note, 205,000 H. Received cash on account, 135,000. I. Issued additional shares of stock for cash, 600,000 J. Paid cash for prepaid expenses, 10,000Explanation / Answer
Current Assets= Cash + Marketable securities + Accounts & Notes Payable + Inventories+ Prepaid Expenses
= $ 442500 +165000+ 320000+ 700000+ 40000
= $ 1667500
Current Liabilities= Accounts Payable+ Notes Payable + Accrued Expenses
= $ 190000+ 260000+ 315000
= $ 765000
Quick Assets= Cash + Marketable securities + Accounts & Notes Payable
= $ 442500 +165000+ 320000
= $ 927500
1. (A) Working Capital = Current Assets- Current Liabilities
= $ 1667500- 765000
= $ 902500
(B) Current Ratio= Current Assets/ Current Liabilities
= $ 1667500/ 765000
= 2.2
(C) Quick Ratio= Quick Assets/ Current Liabilities
= $ 927500/ 765000
= $ 1.2
2.
Transaction Working Capital Current Ratio Quick Ratio A 902500 2.2 1.2 B 902500 2.4 1.3 C 902500 2.0 1.1 D 902500 2.4 1.2 E 767500 1.9 1.0 F 902500 2.2 1.2 G 1107500 2.4 1.5 H 902500 2.2 1.2 I 1502500 3.0 2.0 J 902500 2.2 1.2Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.