The following data are taken from the balance sheet at the end of the current ye

Question

The following data are taken from the balance sheet at the end of the current year: 2,500 Cesr 1,000 Retained Earnings 9,000 8,000 2,000 0,000 .5,000 Accoonts Tecelvabte SRI8 Treasury Stocks -Aecrued Expenses .. 6,000 Faxes Payable ,500 1 2,500 Paid in capital sale/treasury stocks 7,000 Acount Cuttent amountaccount Total Total Total 2. Compute the working capital, current ratio, and the quick ratio based on the information above and record the results in the appropriate columns. Round to the nsarest ons desimal peints 3. Consider each transaction separately, and assume that only that transaction affects the data givern. a.. Sold furniture for cash, $3,000 b... Paid taxes payable $2,000. c. Purchased treasury stocks for cash $2,500 d. Declared Cash dividends of $4,000 Record the answers in the appropriate columns. Current assets quick assets current liabilities working capital current ratio Quick ratio 3a, 3b. 3c. 3d.

Explanation / Answer

1) Current assets:- Accounts receivable $6000, Accrued expenses:- 2200 , Inventory Rs.8000, Furniture Rs.10000

Quick assets :- prepaid expenses $ 2500, cash $10000

Current liabilities :- Account payable $3000

2) Working capital:- $41700

Current ratio: 44700/3000 = 14.9

Quick Ratio:- 12500/3000= 4.16

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