Question

Financial statement data of ABC Fencing, Inc. include the following items:
Cash .................... $ 21,000
Short-Term Investments .......... 25,000
Accounts Receivable, Net .......... 102,000
Inventory ................ 121,000
Prepaid Expenses .............. 15,000
Total Assets ................ 660,500
Short-Term Notes Payable .......... 45,000
Accounts Payable .............. 106,000
Accrued Liabilities ............... 44,000
Long-Term Notes Payable .......... 160,000
Other Long-Term Liabilities .......... 37,000
Net Income ................. 77,000
Number of Common Shares Outstanding .... 37,000 shares
Requirements
1. Compute ABC Fencing’s current ratio, debt ratio, and earnings per share. Assume that the company had no preferred shares outstanding. Round all ratios to two decimal places.
2. Compute each of the same three ratios after evaluating the effect of each transaction that follows:
a. Purchased merchandise of $40,000 on account, debiting Inventory.
b. Issued 2,000 common shares, receiving cash of $78,000.
c. Borrowed $78,000 on a long-term note payable.
d. Received cash on account, $18,000.


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  • CreatedJuly 08, 2015
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