Herron Products presently has a current ratio of 2.0 to 1 and a quick ratio of 1.8
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Herron Products presently has a current ratio of 2.0 to 1 and a quick ratio of 1.8 to 1. For each of the following transactions, specify the effect of the transaction on these two ratios. Use I for increase, D for decrease, and NC for no change. Consider each transaction separately.
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A. Collection of Accounts Receivable B. Recording accrued but unpaid interest. C. Purchase of inventory on account. Payment of an account payable. D. E. Borrowing from the bank on a short-term note. F. Purchase of temporary investments. G. Payment of insurance premium of six months in advance. H. Additional contributions of cash made by owners. I. Purchase of equipment with a cash down payment and long-term note payable. J. Granted a sales allowance to a credit customer. Current Quick
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Transaction Current Ratio Effect Quick Ratio Effect A Collection of Accounts Receivable NC NC B Recording accrued but unpaid interest NC NC C Purchase ...View the full answer
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Related Book For
Introduction To AccountingAn Integrated Approach
ISBN: 9781119600107
8th Edition
Authors: Penne Ainsworth, Dan Deines
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