Denna Company’s working capital accounts at the beginning of the year follow:

During the year, Denna Company completed the following transactions:
x. Paid a cash dividend previously declared, $12,000.
Issued additional shares of common stock for cash, $100,000.
Sold inventory costing $50,000 for $80,000, on account.
Wrote off uncollectible accounts in the amount of $10,000, reducing the accounts receivable balance accordingly.
Declared a cash dividend, $15,000.
Paid accounts payable, $50,000.
Borrowed cash on a short-term note with the bank, $35,000.
Sold inventory costing $15,000 for $10,000 cash.
Purchased inventory on account, $60,000.
Paid off all short-term notes due, $30,000.
Purchased equipment for cash, $15,000.
Sold marketable securities costing $18,000 for cash, $15,000.
Collected cash on accounts receivable, $80,000.
Required:
Compute the following amounts and ratios as of the beginning of the year:
Working capital.
Current ratio.
Acid-test ratio.
Indicate the effect of each of the transactions given above on working capital, the current ratio, and the acid-test ratio. Give the effect in terms of increase, decrease, or none. Item (x) is given below as an example of the format touse:

View less »