Indicate the effects of the transactions listed below on each of the following:
ID: 2538821 • Letter: I
Question
Indicate the effects of the transactions listed below on each of the following: total current assets, working capital (CA-CL), and current ratio. Indicate increase with “+,” indicate decrease with “ - “ and indicate no effect or effect cannot be determined with “0.”
Total Current Assets
Working Capital
Current Ratio
Food is sold for cash.
Equipment is sold at less than its net book value.
Beverages are sold on account.
A cash dividend is declared.
Accrued payroll is paid.
Treasury stock is purchased.
A fully depreciated fixed asset is retired.
Equipment is purchased with long-term notes.
Utility expenses are paid (they were not previously accrued).
A cash dividend is paid.
Total Current Assets
Working Capital
Current Ratio
Food is sold for cash.
Equipment is sold at less than its net book value.
Beverages are sold on account.
A cash dividend is declared.
Accrued payroll is paid.
Treasury stock is purchased.
A fully depreciated fixed asset is retired.
Equipment is purchased with long-term notes.
Utility expenses are paid (they were not previously accrued).
A cash dividend is paid.
Explanation / Answer
Total Current Assets
Working Capital
Current Ratio
Food is sold for cash.
0
0
0
Equipment is sold at less than its net book value.
+
+
+
Beverages are sold on account.
0
0
0
A cash dividend is declared.
0
-
-
Accrued payroll is paid.
-
0
+
Treasury stock is purchased.
-
-
-
A fully depreciated fixed asset is retired.
+
+
+
Equipment is purchased with long-term notes.
0
0
0
Utility expenses are paid (they were not previously accrued).
-
-
-
A cash dividend is paid.
-
0
+
Total Current Assets
Working Capital
Current Ratio
Food is sold for cash.
0
0
0
Equipment is sold at less than its net book value.
+
+
+
Beverages are sold on account.
0
0
0
A cash dividend is declared.
0
-
-
Accrued payroll is paid.
-
0
+
Treasury stock is purchased.
-
-
-
A fully depreciated fixed asset is retired.
+
+
+
Equipment is purchased with long-term notes.
0
0
0
Utility expenses are paid (they were not previously accrued).
-
-
-
A cash dividend is paid.
-
0
+
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