Plum Corporation began the month of May with $1,100,000 of current assets, a current ratio of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Plum Corporation began the month of May with $1,100,000 of current assets, a current ratio of 2.70:1, and an acid-test ratio of 1.70:1. During the month, it completed the following transactions (the company uses a perpetual inventory system). May 2 Purchased $75,000 of merchandise inventory on credit. May 8 Sold merchandise inventory that cost $55,000 for $140,000 cash. May 10 Collected $28,000 cash on an account receivable. May 15 Paid $26,000 cash to settle an account payable. May 17 Wrote off a $5,000 bad debt against the Allowance for Doubtful Accounts account. May 22 Declared a $1 per share cash dividend on its 66,000 shares of outstanding common stock. May 26 Paid the dividend declared on May 22. May 27 Borrowed $120,000 cash by giving the bank a 30-day, 10 % note. May 28 Borrowed $150,000 cash by signing a long-term secured note. May 29 Used the $270,000 cash proceeds from the notes to buy new machinery. Required: Complete the table below showing Plum's (1) current ratio, (2) acid-test ratio, and (3) working capital after each transaction. Note: Do not round intermediate calculations. Round your ratios to 2 decimal places and the working capitals to nearest dollar amount. Amounts to be deducted should be indicated with a minus sign. Note: Do not round intermediate calculations. Round your ratios to 2 decimal places and the working capitals to nearest dollar amount. Amounts to be deducted should be indicated with a minus sign. Transaction Beginning Current Assets Quick Assets Current Liabilities $ 1,100,000 $ 692,593 $ May 2 May 2 Balance after May 2 1,100,000 May 8 May 8 Balance after May 8 May 10 May 10 Balance after May 10 May 15 May 15 Balance after May 15 May 17 May 17 Balance after May 17 May 22 May 22 Balance after May 22 May 26 May 26 Balance after May 26 May 27 May 27 Balance after May 27 May 28 May 28 Balance after May 28 May 29 May 29 Balance after May 29 Current Ratio 407,407 2.70 Acid-Test Ratio Working Capital 1.70 $ 692,593 407,407 Plum Corporation began the month of May with $1,100,000 of current assets, a current ratio of 2.70:1, and an acid-test ratio of 1.70:1. During the month, it completed the following transactions (the company uses a perpetual inventory system). May 2 Purchased $75,000 of merchandise inventory on credit. May 8 Sold merchandise inventory that cost $55,000 for $140,000 cash. May 10 Collected $28,000 cash on an account receivable. May 15 Paid $26,000 cash to settle an account payable. May 17 Wrote off a $5,000 bad debt against the Allowance for Doubtful Accounts account. May 22 Declared a $1 per share cash dividend on its 66,000 shares of outstanding common stock. May 26 Paid the dividend declared on May 22. May 27 Borrowed $120,000 cash by giving the bank a 30-day, 10 % note. May 28 Borrowed $150,000 cash by signing a long-term secured note. May 29 Used the $270,000 cash proceeds from the notes to buy new machinery. Required: Complete the table below showing Plum's (1) current ratio, (2) acid-test ratio, and (3) working capital after each transaction. Note: Do not round intermediate calculations. Round your ratios to 2 decimal places and the working capitals to nearest dollar amount. Amounts to be deducted should be indicated with a minus sign. Note: Do not round intermediate calculations. Round your ratios to 2 decimal places and the working capitals to nearest dollar amount. Amounts to be deducted should be indicated with a minus sign. Transaction Beginning Current Assets Quick Assets Current Liabilities $ 1,100,000 $ 692,593 $ May 2 May 2 Balance after May 2 1,100,000 May 8 May 8 Balance after May 8 May 10 May 10 Balance after May 10 May 15 May 15 Balance after May 15 May 17 May 17 Balance after May 17 May 22 May 22 Balance after May 22 May 26 May 26 Balance after May 26 May 27 May 27 Balance after May 27 May 28 May 28 Balance after May 28 May 29 May 29 Balance after May 29 Current Ratio 407,407 2.70 Acid-Test Ratio Working Capital 1.70 $ 692,593 407,407
Expert Answer:
Answer rating: 100% (QA)
Answer Plum Corporation Ratio and Working Capital Analysis May Transaction Date Current Ratio AcidTe... View the full answer
Related Book For
Fundamental Accounting Principles
ISBN: 978-1259536359
23rd edition
Authors: John Wild, Ken Shaw, Barbara Chiappett
Posted Date:
Students also viewed these finance questions
-
Plum Corporation began the month of May with $700,000 of current assets, a current ratio of 2.50:1, and an acid-test ratio of 1.10:1. During the month, it completed the following transactions (the...
-
On March 1, 2014, Eire Co. paid $4,800 to Big North Insurance for a one-year insurance policy. Eire Co. has a December 31 fiscal year end and adjusts accounts annually. Complete the following for...
-
You are given a research question concerning making an election to be treated as an S corporation for federal tax purposes. Using the index of the following services, identify the volume and...
-
A In the draft accounts for the year ended 31 October 2012 of Thomas P. Lee, garage proprietor, the balance at bank according to the cash book was 894.68 in hand. Subsequently the following...
-
Crawford & Co. uses sales and purchases journals in its accounting system. The following transactions took place during April (ignore GST): Required (a) Establish all necessary general ledger...
-
a. Draw the network diagram for this problem. b. Implement the model for this problem in your spreadsheet and solve it. c. How much fuel should US Express purchase at each departure point and what is...
-
which muscle were use to extend and splay your finger outward?
-
Big data analytics applications enable users to develop predictive models, by analyzing large volumes of structured and unstructured data. On a broad scale, data analytics technologies and techniques...
-
(3) Filling a 15-gallon tank with gasoline of a density of 800 kg/m on average takes 4 minutes. If the heating value of the gasoline (the amount of heat released by burning 1 kg of gasoline) is 45...
-
Breakeven Point A product development project has been proposed to create a derivative product from one of the standard products for niche customers who are hobbyists. This would require some...
-
The Accounting Department has provided the following data concerning the proposed new product: HVM Drums Selling Price per frame..... Cost per frame: 13,112.00 Direct Materials 5,420.00 Direct Labor...
-
1. The building at 1200 Main Street comprises 32 one-bedroom units. The building was built 20 years ago and appears to have had little to no major updates done since it was built. The layouts of the...
-
I am just taking a first red through your posts. Thank you everyone who has contributed so far - it's wonderful to see the talk has resonated with you and it's prompting some great conversations. I...
-
Discuss the legal procedure of a labor union becoming the certified representative for a group of employees, the Federal Statutes that apply to each stage of the procedure and the relationship...
-
ABC company leased new advanced computer equipment to STU Ltd on 1 January 2019.STULtd has to pay annual rental of $290,000 starting at 1 January 2019. It is a four years lease with ultimate rental...
-
A tax auditor reviewing a tax return looks for several kinds of problems, including these two: (1) mistakes made in entering or calculating numbers on the tax return and (2) places where the taxpayer...
-
The weights of individual M&M plain candies were obtained by placing each candy in a paper cup, then obtaining the weight without accounting for the weight of the cup. Identify at least one likely...
-
For a flight on a small plane, the pilot asks passengers what they weigh. Identify at least one likely source of random errors and also identify at least one likely source of systematic errors.
Study smarter with the SolutionInn App