Question: can someone please help:) ( keep in mind the current ratio of 2.40:1 and acid-test ratio of 1.60:1 ) Problem 13-3A (Algo) Transactions, working capital,


Problem 13-3A (Algo) Transactions, working capital, and liquidity ratios LO P3 Plum Corporation began the month of May with $800,000 of current assets, a current ratio of 2.40:1, and an acid-test ratio of 1.601. During the month, it completed the following transactions (the company uses a perpetual inventory system). May 2 Purchased $70,000 of merchandise inventory on eredit. May B sold merchandise inventory that cost $65,000 for $150,000 cash. May 10 collected $31,000 canh on an account receivable. May 15 paid 522,500 eash to nettle an account payable. May 17 Wrote off a $5,000 bad debt againat the Nilowance for Doubtfu1 Accounts account. May 22 Declared a $1 per ahare cash dividend on Ita 66,000 shares of outstanding comnon atock. May 26 paid the dividend deelared on May 22. May 27 Borrowed $120,000 cash by qiving the bank a 30-day, 108 note. May 28 Borrowed $135,000 canh by signing a long-term secured note. May 29 Used the $255,000 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. (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.) Amounts to be deducted should be indicated with a minus sign.)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
