Indicate whether the following independent transactions increase ([1]) decreas

Indicate whether the following independent transactions increase ([1]) decrease (

) or do not affect (NE) the current ratio the amount of working capital and cash from operations. Also indicate the amounts of any effects. The company
presently has a current ratio of 2 to 1 along with current liabilities of $160000.

Current Ratio Effect

Working Capital

Cash from Operations

Effect $

Effect $

a. Paid accrued wages of $1000.

b. Purchased $20000 worth of material on account.

c. Received judgment notice from the court that the

company must pay $70000 damages for patent

infringement within six months.

d. Collected $8000 of accounts receivable.

e. Purchased land for factory for $100000 cash.

f. Repaid currently due bank note payable of $10000.

g. Received currently due note receivable of $15000 from

customer as consideration for sale of land.

h. Received cash of $90000 from stockholders as

donated capital.

i. Purchased machine costing $50000; $15000 down

and the balance to be paid in seven equal annual


j. Retired bonds maturing five years hence at par of

$50000. Bonds have unamortized premium of $2000.

k. Declared dividends of $10000 payable after year-end.

l. Paid the dividends in k in cash.

m. Declared a 5% stock dividend.

n. Paid the stock dividend in m.

o. Signed a long-term purchase contract of $100000 to

commence a year from now.

p. Borrowed $40000 cash for one year.

q. Paid accounts payable of $20000.

r. Purchase a patent for $20000.

s. Wrote off $15000 of current marketable securities that

became worthless.

t. $8500 of organization expenses were written off.

u. Recorded depreciation expense of $70000.

v. Sold $28000 of merchandise on account.

w. Sold a building for $90000 that had a book value of


x. Sold a machine at cost for $5000; received $2500

down and the balance receivable in six months.

y. Recorded income tax expense of $80000 half of which

is deferred (long term).

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