Reference no: EM132957996
Question 1 - Assume that the current ratio for Arch Company is 2.5, its acid-test ratio is 2.0, and its working capital is $340,000. Answer each of the following questions independently, always referring to the original information.
Required -
How much does the firm have in current liabilities? (Do not round intermediate calculations.)
If the only current assets shown on the balance sheet for Arch Company are Cash, Accounts Receivable, and Merchandise Inventory, how much does the firm have in Merchandise Inventory? (Do not round intermediate calculations.)
If the firm collects an account receivable of $104,000, what will its new current ratio and working capital be? (Round "Current ratio" to 1 decimal place.)
If the firm pays an account payable of $60,000, what will its new current ratio and working capital be? (Do not round intermediate calculations. Round "Current ratio" to 1 decimal place.)
If the firm sells inventory that was purchased for $50,000 at a cash price of $55,000, what will its new acid-test ratio be? (Do not round intermediate calculations. Round your answer to 1 decimal place.)
Question 2 - Selected balance sheet accounts for Tibbetts Company on September 30, 2019, are as follows:
Cash $38,400
Marketable securities 108,000
Accounts receivable, net 132,000
Inventory 150,000
Prepaid expenses 16,800
Total current assets $445,200
Accounts payable $90,000
Other accrued liabilities 22,000
Short-term debt 40,000
Total current liabilities $152,000
Required -
Calculate the working capital, current ratio, and acid-test ratio for Tibbetts Company as of September 30, 2019.
Summarized here are the transactions/events that took place during the fiscal year ended September 30, 2020. Prepare journal entries for the below transactions and Indicate the effect of each item on Tibbetts Company's working capital, current ratio, and acid-test ratio. Use + for increase, - for decrease, and (NE) for no effect.
Credit sales for the year amounted to $288,000. The cost of goods sold was $187,200.
Collected accounts receivable, $302,400.
Purchased inventory on account, $201,600.
Issued 600 shares of common stock for $22 per share.
Wrote off $8,400 of uncollectible accounts using the allowance for bad debts.
Declared and paid a cash dividend, $24,000.
Sold marketable securities costing $31,200 for $37,200 in cash.
Recorded insurance expense for the year, $14,400. The premium for the policy was paid in June 2019.
Borrowed cash on a short-term bank loan, $12,000.
Repaid principal of $48,000 and interest of $3,600 on a long-term bank loan.
Question 3 - The following information was available for the year ended December 31, 2019:
Earnings before interest and taxes (operating income) $105,000
Interest expense 25,000
Income tax expense 30,000
Net income 50,000
Total assets at year-end 350,000
Total liabilities at year-end 180,000
Required -
Calculate the debt ratio at December 31, 2019. (Round your answer to 1 decimal place.)
Calculate the debt/equity ratio at December 31, 2019. (Round your answer to 2 decimal places.)
Calculate the times interest earned for the year ended December 31, 2019. (Round your answer to 2 decimal places.)
Question 4 - The following amounts were reported on the December 31, 2019, balance sheet:
Cash $50,000
Accounts receivable 137,500
Common stock 250,000
Wages payable 31,250
Retained earnings 500,000
Land 125,000
Accounts payable 12,150
Bonds payable 734,360
Merchandise inventory 90,260
Buildings and equipment, net of accumulated depreciation 1,125,000
Required -
Calculate working capital at December 31, 2019.
Calculate the current ratio at December 31, 2019. (Round your answer to 1 decimal place.)
Calculate the acid-test ratio at December 31, 2019. (Round your answer to 1 decimal place.)
Question 5 - The following information was available for the year ended December 31, 2019:
Net sales $1,095,000
Cost of goods sold 657,000
Average accounts receivable for the year 44,250
Accounts receivable at year-end 18,000
Average inventory for the year 226,000
Inventory at year-end 158,400
Required -
Calculate the inventory turnover for 2019. (Round your answer to 2 decimal places.)
Calculate the number of days' sales in inventory for 2019, using year-end inventories. (Use 365 days a year. Round your answer to 1 decimal place.)
Calculate the accounts receivable turnover for 2019. (Round your answer to 1 decimal place.)
Calculate the number of days' sales in accounts receivable for 2019, using year-end accounts receivable. (Use 365 days a year. Round your answer to 1 decimal place.)