E12-7 Analyzing the Impact of Selected Transactions on the Current Ratio LO12-8 Current assets for JC Inc. totalled $58,300, and the current ratio was 2.12. Assume that the following transactions were completed: (1) Purchased merchandise for $6,300 on short-term credit. (2) Purchased a delivery truck for $25,000-paid $8,450 cash and signed a two-year interest-bearing note for the balance. Required: 1. Determine without computations if the current ratio will increase, decrease, or remain unchanged after each transaction. Transaction (1) Transaction (2) Answer is complete and correct. Impact on Current Ratio Decrease Decrease 2. Compute the current ratio after each transaction. (Round the final answers to 2 decimal places.) Answer is complete but not entirely correct. Current Ratio 1.91 2.03 Transaction (1) Transaction (2)

E12-7 Analyzing the Impact of Selected Transactions on the Current Ratio LO12-8 Current assets for JC Inc. totalled $58,300, and the current ratio was 2.12. Assume that the following transactions were completed: (1) Purchased merchandise for $6,300 on short-term credit. (2) Purchased a delivery truck for $25,000-paid $8,450 cash and signed a two-year interest-bearing note for the balance. Required: 1. Determine without computations if the current ratio will increase, decrease, or remain unchanged after each transaction. Transaction (1) Transaction (2) Answer is complete and correct. Impact on Current Ratio Decrease Decrease 2. Compute the current ratio after each transaction. (Round the final answers to 2 decimal places.) Answer is complete but not entirely correct. Current Ratio 1.91 2.03 Transaction (1) Transaction (2)

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter9: Metric-analysis Of Financial Statements

Section: Chapter Questions

Problem 9.4.10P: Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of...

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