The following financial information is for Priscoll Company.

Additional information:

1. Inventory at the beginning of 2019 was $115,000.

2. Accounts receivable (net) at the beginning of 2019 were $86,000.

3. Total assets at the beginning of 2019 were $660,000.

4. No common stock transactions occurred during 2019 or 2020.

5. All sales were on account.

Instructionsa. Indicate, by using ratios, the change in liquidity and profitability of Priscoll Company from 2019 to 2020. (Note: Not all profitability ratios can be computed nor can cash-basis ratios be computed.)

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, 2020, and (2) as of December 31, 2021, after giving effect to the situation.

? ? ? ? ? ? ? ? ? ? ? ? ? ?? ? ?Situation ??? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?Ratio1. 18,000 shares of common stock were sold at par on July ? ? ? ? ? ? ? ? ? ?Return on ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?1, 2021. Net income for 2021 was $54,000. ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?common2. All of the notes payable were paid in 2021. All other ? ? ? ? ? ? ? ? ? ? ? ? ? stockholder'sliabilities remained at their December 31, 2020, levels. ? ? ? ? ? ? ? ? ? ? ? ? ? equityAt December 31, 2021, total assets were $900,000. ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?Debt to assets ratio

3. The market price of common stock was $9 and $12 on ? ? ? ? ? ? ? ? ? ? ?Price-December 31, 2020 and 2021, respectively. Net income ? ? ? ? ? ? ? ? ? ? ? ?earningsfor 2021 was $54,000 ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?ratio? ? ?

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Priscoll Company Balance Sheets December 31 Assets 2020 2019 $ 70,000 $ 65,000 Cash Debt investments (short-term) 55,000 40,000 Accounts receivable 104,000 90,000 Inventory 230,000 165,000 Prepaid expenses 25,000 23,000 Land 130,000 130,000 Building and equipment (net) 260.000 185.000 $874,000 $698,000 Total assets Liabilities and Stockholders' Equity Notes payable (short-term) $170,000 $120,000 Accounts payable 65,000 52,000 Accrued liabilities 40,000 40,000 Bonds payable, due 2023 Common stock, $10 par 250,000 170,000 200,000 200,000 Retained earnings 149.000 116.000 Total liabilities and stockholders' equity $874,000 $698,000 Priscoll Company Income Statements For the Years Ended December 31 2020 2019 Sales revenue $882,000 $790,000 Cost of goods sold 640,000 575.000 Gross profit 242,000 215,000 Operating expenses 190.700 167,000 Net income $ 52,000 $ 48,000