Question

Indicate the effects of the transactions listed in the following table on total current assets, current ratio, net income and cash flow. Use (+) to indicate an increase, (-) to indicate a decrease, and (0) to indicate either no effect or an indeterminate effect. Be prepared to state any necessary assumptions and assume an initial current ratio of more than 1.0 Total Current Current Ratio Effect on Net Assets Impact on Cash Flow income 1) 2) 3) 4) 5) 6) 7) 8) 9) Cash is acquired through issuance of additional Common Stock Merchandise is sold for Cash A fixed asset is sold for less than the book value A fixed asset is sold for more than the book value Merchandise is sold on Credit Payment is made to trade creditors for previous urchases A cash dividend is declared and paid Short term notes receivable are sold at discount Marketable Security are sold below cost Current operating expenses are paid Short term promissory notes are issued to trade creditors in exchange for past due accounts payable 12)10-years notes are issued to pay off accounts payable 13) A fully depreciated asset is retired 14) Accounts receivable are collected 15) 16) Merchandise is purchased on Credit Equipment is purchased with short term notes

Answer 1