Current Ratio Effect

Working Capital

Cash from Operations

Effect $

Effect $

a. Paid accrued wages of $1,000.

b. Purchased $20,000 worth of material on account.

c. Received judgment notice from the court that the

company must pay $70,000 damages for patent

infringement within six months.

d. Collected $8,000 of accounts receivable.

e. Purchased land for factory for $100,000 cash.

f. Repaid currently due bank note payable of $10,000.

g. Received currently due note receivable of $15,000 from

customer as consideration for sale of land.

h. Received cash of $90,000 from stockholders as

donated capital.

i. Purchased machine costing $50,000; $15,000 down

and the balance to be paid in seven equal annual

installments.

j. Retired bonds maturing five years hence at par of

$50,000. Bonds have unamortized premium of $2,000.

k. Declared dividends of $10,000 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 $100,000 to

commence a year from now.

p. Borrowed $40,000 cash for one year.

q. Paid accounts payable of $20,000.

r. Purchase a patent for $20,000.

s. Wrote off $15,000 of current marketable securities that

became worthless.

t. $8,500 of organization expenses were written off.

u. Recorded depreciation expense of $70,000.

v. Sold $28,000 of merchandise on account.

w. Sold a building for $90,000 that had a book value of

$45,000.

x. Sold a machine at cost for $5,000; received $2,500

down and the balance receivable in six months.

y. Recorded income tax expense of $80,000, half of which

is deferred (long term).