The following account balances are taken from the records of Veriform Inc.:

Cash.........................................................$ 70,000

Short-term investments......................................60,000

Accounts receivable..........................................80,000

Inventory....................................................100,000

Prepaid insurance............................................10,000

Accounts payable...........................................75,000

Taxes payable................................................25,000

Salaries and wages payable...............................40,000

Short-term loans payable.................................210,000

Required

1. Use the information provided to compute the amount of working capital and Veriform's cur-rent and quick ratios (round to three decimal points).

2. Determine the effect that each of the following transactions will have on Veriform's working capital, current ratio, and quick ratio by recalculating each and then indicating whether the measure is increased, decreased, or not affected by the transaction. (For the ratios, round to three decimal points.) Consider each transaction independently; that is, assume that it is the only transaction that takes place.

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Effect of Transaction on Working Current Quick Transaction Capital Ratio Ratio a. Purchased inventory on account, $20,000 b. Purchased inventory for cash, $15,000 C. Paid suppliers on account, $30,000 d. Received cash on account, $40,000 e. Paid insurance for next year, $20,000 f. Made sales on g. Repaid short-term loans at bank, $25,000 h. Borrowed $40,000 at bank for 90 days i. Declared and paid $45,000 cash dividend j. Purchased $20,000 of short-term investments k. Paid $30,000 in salaries l. Accrued additional $15,000 in taxes account, $60,000