Financial statement data of MKR Bakery Supplies Ltd. include the following items: Cash.$ 68,000 Accounts receivable, net.97,500

Question:

Financial statement data of MKR Bakery Supplies Ltd. include the following items:

Cash…………………………………………………………………………….$ 68,000

Accounts receivable, net……………………………………………………….…97,500

Inventories……………………………………………………………………....129,000

Prepaid expenses…………………………………………………………………..6,000

Total assets……………………………………………………………………...625,000

Short-term notes payable………………………………………………………....39,000

Accounts payable……………………………………………………………….109,500

Accrued liabilities………………………………………………………………..27,000

Long-term liabilities…………………………………………………………….204,000

Net income……………………………………………………………………...103,000

Number of common shares outstanding………………………………………40,000 shares

Required

1. Compute MKR Bakery Supplies Ltd.’s current ratio, debt ratio, and earnings per share.

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

a. Purchased merchandise of $43,000 on account, debiting Inventory.

b. Paid long-term liabilities, $40,000.

c. Declared, but did not pay, a $60,000 cash dividend on common shares.

d. Borrowed $50,000 on a long-term note payable.

e. Issued 10,000 common shares at the beginning of the year, receiving cash of $140,000.

f. Received cash on account, $29,000.

g. Paid short-term notes payable, $25,000.

Set up a table in the following format for your answers:

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...