Problem $11-16($Algo$)$ Effect of transactions on liquidity measures LO $11-1$

Selected balance sheet accounts for Tibbetts Company on September $30,2022,$ are as follows:

Cash$-$ $ $38,400$

Marketable securities$-108,000$

Accounts receivable, net$-132,000$

Inventory$-150,000$

Prepaid expenses$-16,800$

Total current assets$-$ $$445,200$

Accounts payable$-81,000$

Other accrued liabilities$-19,800$

Short$-$term debt$-36,000$

Total current liabilities$-$ $ $136,800$

Required:

a$.$ Calculate the working capital, current ratio, and acid$-$test ratio for Tibbetts Company as of September $30,2022.$

b$.$ Summarized here are the transactions$/$events that took place during the fiscal year ended September $30,2023.$ Prepare journal

entries for the below transactions and indicate the effect of each item on Tibbetts Company's working capital, current ratio, and

acid$-$test ratio. Use $+$ for increase, $-$ for decrease, and $($NE$)$ for no effect.

Credit sales for the year amounted to $$288,000.$ The cost of goods sold was $$187,200.$

Collected accounts receivable, $$302,400.$

Purchased inventory on account, $$201,600.$

Issued $600$ shares of common stock for $$22$ per share.

Wrote off $$8,400$ of uncollectible accounts using the allowance for bad debts.

Declared and paid a cash dividend, $$24,000.$

Sold marketable securities costing $$31,200$ for $$37,200$ in cash.

Recorded insurance expense for the year, $$14,400.$ The premium for the policy was paid in June $2022.$

Borrowed cash on a short$-$term bank loan, $$12,000.$

Repaid principal of $$48,000$ and interest of $$3,600$ on a long$-$term bank loan.