Depoole Company manufactures industrial products and

employs a c
Depoole Company manufactures industrial products and employs a calendar year for financial
reporting purposes. Items (a) through (e) present several of Depoole’s transactions during
2009. The total of cash equivalents, marketable securities, and net receivables exceeded total
current liabilities both before and after each transaction described. Depoole had positive profits
in 2009 and a credit balance throughout 2009 in its retained earnings account.Required Answer
the following multiple-choice questions:a. Payment of a trade account payable of $64,500
would1. Increase the current ratio, but the acid-test ratio would not be affected.2. Increase the
acid-test ratio, but the current ratio would not be affected.3. Increase both the current and acid-
test ratios.4. Decrease both the current and acid-test ratios.5. Have no effect on the current and
acid-test ratios.b. The purchase of raw materials for $85,000 on open account would1. Increase
the current ratio.2. Decrease the current ratio.3. Increase net working capital.4. Decrease net
working capital.5. Increase both the current ratio and net working capital.c. The collection of a
current accounts receivable of $29,000 would1. Increase the current ratio.2. Decrease the
current ratio.3. Increase the acid-test ratio.4. Decrease the acid-test ratio.5. Not affect the
current or acid-test ratios.d. Obsolete inventory of $125,000 was written off during 2009. This
would1. Decrease the acid-test ratio.2. Increase the acid-test ratio.3. Increase net working
capital.4. Decrease the current ratio.5. Decrease both the current and acid-test ratios.e. The
early liquidation of a long-term note with cash would1. Affect the current ratio to a greater
degree than the acid-test ratio.2. Affect the acid-test ratio to a greater degree than the current
ratio.3. Affect the current and acid-test ratios to the same degree.4. Affect the current ratio, but
not the acid-test ratio.5. Affect the acid-test ratio, but not the current ratio.View Solution:
Depoole Company manufactures industrial products and employs a c
SOLUTION-- http://expertanswer.online/downloads/depoole-company-manufactures-industrial-
products-and-employs-a-c/

See Answer here expertanswer.online

Powered by TCPDF (www.tcpdf.org)