Financial statement data of Highland Engineering include the following items:

Requirements

1. Calculate Highland’s current ratio, debt ratio, and earnings per share. Round all ratios to two decimal places.
2. Calculate the three ratios after evaluating the effect of each transaction that follows.

Consider each transaction separately.

a. Borrowed $140,000 on a long-term note payable

b. On January 1, issued 30,000 shares of common stock, receiving cash of $367,000

c. Paid off short-term notes payable, $27,000

d. Purchased $41,000 of merchandise on account, debiting Inventory

e. Received cash on account, $15,000

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Cash Short-term investments.... Accounts receivable, net... Inventories . . Prepaid expenses Total assets Short-term notes payable.. $ 22,000 Accounts payable . Accrued liabilities... Long-term notes payable Other long-term liabilities . Net income.. $102,000 33,000 37,000 . 162,000 87,000 145,000 32,000 9,000 95,000 Number of common 675,000 44,000 shares outstanding . 50,000