The following financial information is for Priscoll Company 

Additional information: 

1. Inventory at the beginning of 2021 was $115,000. 2. Accounts receivable (net) at the beginning of 2021 were $86,000. 

3. Total assets at the beginning of 2021 were $660,000. 

4. No common stock transactions occurred during 2021 or 2022. 

5. All sales were on account. 

Instructions 

a. Indicate, by using ratios, the change in liquidity and profitability of Priscoll Company from 2021 to 2022. 

b. The following are three independent situations and a ratio that may be affected. For each situation, compute the affected ratio (1) as of December 31, 2022, and (2) as of December 31, 2023, after giving effect to the situation. 

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Priscoll Company Balance Sheets December 31 Assets 2022 2021 $ 70,000 $ 65,000 Cash Debt investments (short-term) 55,000 40,000 Accounts receivable 104,000 90,000 Inventory Prepaid expenses Land 230,000 165,000 23,000 25,000 130,000 130,000 Building and equipment (net) 260,000 185,000 Total assets $874,000 $698,000 Liabilities and Stockholders' Equity Notes payable Accounts payable $170,000 $120,000 65,000 52,000 Accrued liabilities 40,000 40,000 Bonds payable, due 2025 Common stock, $10 par Retained earnings 250,000 170,000 200,000 200,000 149,000 116,000 Total liabilities and stockholders' equity $874,000 $698,000 Priscoll Company Income Statements For the Years Ended December 31 2022 2021 Sales revenue $882,000 $790,000 Cost of goods sold 640,000 575,000 Gross profit Operating expenses 242,000 215,000 190,000 167,000 $ 48,000 $ 52,000 Net income Ratio Situation 1. 18,000 shares of common stock were sold at par on July 1, 2023. Net income for 2023 was $54,000. 2. All of the notes payable were paid in 2023. All other liabilities remained at their December 31, 2022, levels. Total assets on December 31, 2023, were $900,000. 3. The market price of common stock was $9 and $12 on December 31, 2022 and 2023, respectively. Net income for 2023 was $54,000. Return on common stockholders' equity Debt to assets ratio Price-earnings ratio