Selected balance sheet accounts for Tice Company on September 30, 2010, are as follows A+

Selected balance sheet accounts for Tice Company on September 30, 2010, are as follows:

Cash $ 32,000

Marketable securities 58,000

Accounts receivable, net 86,000

Inventory 90,000

Prepaid expenses 14,000

Total current assets $ 280,000

Accounts payable $ 137,200

Other accrued liabilities 30,800

Short-term debt 56,000

Total current liabilities $ 224,000

Requirement 1:

Calculate the working capital, current ratio, and acid-test ratio for Tice Company as of September 30, 2010.

Requirement 2:

Summarized here are the transactions/events that took place during the fiscal year ended September 30, 2011.

1. Credit sales for the year amounted to $240,000. The cost of goods sold was $156,000.

2. Collected accounts receivable, $252,000.

3. Purchased inventory on account, $168,000.

4. Issued 500 shares of common stock for $18 per share.

5. Wrote off $7,000 of uncollectible accounts using the allowance for bad debts.

6. Declared and paid a cash dividend, $20,000.

7. Sold marketable securities costing $26,000 for $31,000 in cash.

8. Recorded insurance expense for the year, $12,000.The premium for the policy was paid in June 2010.

9. Borrowed cash on a short-term bank loan, $10,000.

10. Repaid principal of $40,000 and interest of $3,000 on a long-term bank loan.

(a) Write the journal entry(ies) for each items.

(b) Indicate the effect of each item on Tice Company\’s working capital, current ratio, and acid-test ratio. Use + for increase, – for decrease, and (NE) for no effect.

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