Question: Data pertaining to the current position of Newlan Company are as follows: Cash $ 80,000 Temporary investments 160,000 Accounts and notes receivable (net) 235,000 Inventories
Data pertaining to the current position of Newlan Company are as follows:
| Cash | $ 80,000 |
| Temporary investments | 160,000 |
| Accounts and notes receivable (net) | 235,000 |
| Inventories | 190,000 |
| Prepaid expenses | 10,000 |
| Accounts payable | 158,000 |
| Notes payable (short-term) | 80,000 |
| Accrued expenses | 12,000 |
1. Compute (a) the working capital, (b) the current ratio, and (c) the quick ratio.
| Working capital | $ | |
| Current ratio | ||
| Quick ratio |
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.
| Transaction | Working Capital | Current Ratio | Quick Ratio | |
| a. Sold temporary investments for cash at no gain or loss, $50,000. | $ | |||
| b. Paid accounts payable, $40,000. | $ | |||
| c. Purchased goods on account, $75,000. | $ | |||
| d. Paid notes payable, $30,000. | $ | |||
| e. Declared a cash dividend, $15,000. | $ | |||
| f. Declared a stock dividend on common stock, $24,000. | $ | |||
| g. Borrowed cash from bank on a long-term note, $150,000. | $ | |||
| h. Received cash on account, $72,000. | $ | |||
| i. Issued additional shares of stock for cash, $300,000. | $ | |||
| j. Paid cash for prepaid expenses, $10,000. | $ |
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