Effect of Transactions on Current Position Analysis

Data pertaining to the current position of Newlan Company are as follows:

Cash	$328,700
Temporary investments	169,300
Accounts and notes receivable (net)	498,000
Inventories	425,800
Prepaid expenses	22,400
Accounts payable	174,300
Notes payable (short-term)	249,000
Accrued expenses	74,700

Instructions:

1. Compute (a) the working capital, (b) the current ratio, and (c) the quick ratio. Round the current ratio and the quick ratio to one decimal place. (I answered this question already)

Working capital		$946,200
Current ratio		2.9
Quick ratio		2

2. Compute the working capital, the current ratio, and the quick ratio after each of the following transactions, and record the results in the appropriate columns. Consider each transaction separately and assume that only that transaction affects the data given above. Format working capital as whole dollars. Round the current ratio and the quick ratio to one decimal place.

Transaction

Working Capital

Current Ratio

Quick Ratio

a. Sold temporary investments for cash at no gain or loss, $56,000.		$________	_______		_______
b. Paid accounts payable, $100,000.		$________	_______		_______
c. Purchased goods on account, $62,000.		$________	_______		_______
d. Paid notes payable, $124,500.		$________	_______		_______
e. Declared a cash dividend, $100,000.		$________	_______		_______
f. Declared a stock dividend on common stock, $30,000.		$________	_______		_______
g. Borrowed cash from bank on a long-term note, $249,000.		$________	_______		_______
h. Received cash on account, $84,500.		$________	_______		_______
i. Issued additional shares of stock for cash, $498,000.		$________	_______		_______
j. Paid cash for prepaid expenses, $49,800.		$________	_______