Question

Financial statement data of New England Fencing, Inc., include the following items:
Cash............................................................................................ $ 21,000
Short-Term Investments............................................................. 23,000
Accounts Receivable, Net.......................................................... 82,500
Inventory.................................................................................... 119,900
Prepaid Expenses........................................................................ 12,000
Total Assets ................................................................................ 570,000
Short-Term Notes Payable.......................................................... 48,500
Accounts Payable........................................................................ 98,000
Accrued Liabilities...................................................................... 43,500
Long-Term Notes Payable.......................................................... 141,500
Other Long-Term Liabilities ...................................................... 33,000
Net Income ................................................................................. 65,520
Number of Common Shares Outstanding .................................. 52,000

Requirements
1. Compute New England Fencing’s current ratio, debt ratio, and earnings per share. Assume that the company had no preferred stock outstanding. Round all ratios to two decimal places.
2. Compute each of the same three ratios after evaluating the effect of each independent transaction that follows.
a. Purchased merchandise of $38,000 on account, debiting Inventory.
b. Issued 6,500 shares of common stock, receiving cash of $65,000. Use total shares outstanding at year-end instead of average shares outstanding.
c. Borrowed $100,000 on a long-term note payable.
d. Received cash on account, $21,500.



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  • CreatedApril 29, 2014
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