10 Nov Effect of transactions on current ratio and workin
Effect of transactions on current ratio and working capitalLagory Manufacturing has a current ratio of 3:1 on December 31, 2006. Indicate whether each of the following transactions would increase (+), decrease (-), or not affect (NA) Lagory’s current ratio and its working capital.Requireda. Paid cash for a trademark.b. Wrote off an uncollectible account receivable.c. Sold equipment for cash.d. Sold merchandise at a profit (cash).e. Declared a cash dividend.f. Purchased inventory on account.g. Scrapped a fully depreciated machine (no gain or loss).h. Issued a stock dividend.i. Purchased a machine with a long-term note.j. Paid a previously declared cash dividend.k. Collected accounts receivable.l. Invested in current marketable securities.
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