Liabilities and Shareholders’ Equity Accounts Payable 100,000 10.00% 90,000 (10,000) Short Term Notes 120,000 (20%) Payable 150,000 (30,000) Bonds Payable 50.00% 180,000 120,000 60,000 Common Stock 200,000 25.00% 160,000 40,000 Retained Earnings 10,000 5.00% 210,000 200,000 Total Liabilities and 70,000 Shareholders’ Equity Statement of Financial Position As of December 31, 2019 Assets Amount % Cash 45,000 11.25% Marketable Securities 60000 15% Accounts Receivable, net 65,000 16.25% Inventory 80000 20%
Property, Plant and Equipment, net 150,000 37.50%
Total Assets 400,000 100%
Liabilities and Shareholders Equity Accounts Payable 45,000 11.25%
Short Term Notes Payable 62,000 15.50%
Bonds Payable 75,000 18.75% Common Stock 125,000 31.25% Retained Earnings 93,000 23.25% Total Liabilities and Shareholders Equity 100% Activity # 3- State the effect of the following transactions on current ratio. Use INCREASE, DECREASE OR NO EFECT for your answer. Assume that the current ratio is presently greater than 1
1. Collection of accounts receivables NO EFFECT
2. Collection of accounts receivable within the discount period DECREASE 3. Declaration of cash dividends DECREASE 4. Additional stocks sold for cash INCREASE 5. Accounts payable are paid INCREASE 6. Equipment purchased for cash DECREASE 7. Inventory purchases are made for cash NO EFFECT 8. Inventory purchases are made on account DECREASE 9. Sold an inventory on account INCREASE 10. Sold an inventory for cash INCREASE
Activity # 4- State the effect of the following transactions on current ratio. Use INCREASE, DECREASE OR NO EFECT for your answer. Assume that the current ratio is presently less than 1
1. Collection of accounts receivables NO EFFECT
2. Collection of accounts receivable within the discount period DECREASE 3. Declaration of cash dividends DECREASE 4. Additional stocks sold for cash INCREASE 5. Accounts payable are paid DECREASE 6. Equipment purchased for cash DECREASE 7. Inventory purchases are made for cash NO EFFECT 8. Inventory purchases are made on account INCREASE 9. Sold an inventory on account INCREASE 10. Sold an inventory for cash INCREASE