Financial statement data of American Traveler Magazine include the following items: Cash ................. $ 23,000 Accounts Receivable,

Question:

Financial statement data of American Traveler Magazine include the following items:

Cash ................. $ 23,000

Accounts Receivable, Net .......... 79,000

Merchandise Inventory ........... 184,000

Total Assets .............. 634,000

Accounts Payable .............. 104,000

Accrued Liabilities ............40,000

Short- term Notes Payable .........47,000

Long- term Liabilities .......... 221,000

Net Income ..............74,000

Common Shares Outstanding .......60,000


Requirements

1. Compute American Traveler’s current ratio, debt ratio, and earnings per share. Round all ratios to two decimal places, and use the following format for your answer:

Current Ratio Debt Ratio Earnings per Share

2. Compute the three ratios after evaluating the effect of each transaction that follows. Consider each transaction separately.

a. Purchased merchandise inventory of $ 49,000 on account.

b. Borrowed $ 122,000 on a long-term note payable.

c. Issued 6,000 shares of common stock, receiving cash of $ 103,000.

d. Received cash on account, $ 3,000.


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Horngrens Financial and Managerial Accounting

ISBN: 978-0133255584

4th Edition

Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura

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