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Problem 17-3A Transactions, working capital, and liquidity ratios LO P3

Plum Corporation began the month of May with $600,000 of current assets, a current ratio of 2.30:1, and an acid-test ratio of 1.30:1. During the month, it completed the following transactions (the company uses a perpetual inventory system).

May	2	Purchased $60,000 of merchandise inventory on credit.
	8	Sold merchandise inventory that cost $60,000 for $120,000 cash.
	10	Collected $26,000 cash on an account receivable.
	15	Paid $27,500 cash to settle an account payable.
	17	Wrote off a $5,000 bad debt against the Allowance for Doubtful Accounts account.
	22	Declared a $1 per share cash dividend on its 58,000 shares of outstanding common stock.
	26	Paid the dividend declared on May 22.
	27	Borrowed $100,000 cash by giving the bank a 30-day, 10% note.
	28	Borrowed $120,000 cash by signing a long-term secured note.
	29	Used the $220,000 cash proceeds from the notes to buy new machinery.

Required:

Prepare a table showing Plum's (1) current ratio, (2) acid-test ratio, and (3) working capital after each transaction. (Do not round intermediate calculations. Round your ratios to 2 decimal places and the working capitals to nearest dollar amount.Subtracted amount should be indicated with a minus sign Problem 17-3A Transactions, working capital, and liquidity ratios LO P3 Plum Corporation began the month of May with $600,000 of current assets, a current ratio of 2.30:1, and an acid-test ratio of 1.30:1. During the month, it completed the following transactions (the company uses a perpetual inventory system). May 2 Purchased $60,000 of merchandise inventory on credit. 8 Sold merchandise inventory that cost $60,000 for $120,000 cash. 10 Collected $26,000 cash on an account receivable. 15 Paid $27,500 cash to settle an account payable. 17 Wrote off a $5,000 bad debt against the Allowance for Doubtful Accounts account. 22 Declared a $1 per share cash dividend on its 58,000 shares of outstanding common stock. 26 Paid the dividend declared on May 22. 27 Borrowed $100,000 cash by giving the bank a 30-day, 10% note. 28 Borrowed $120,000 cash by signing a long-term secured note. 29 Used the $220,000 cash proceeds from the notes to buy new machinery. Required: Prepare a table showing Plum's (1) current ratio, (2) acid-test ratio, and (3) working capital after each transaction. (Do not round intermediate calculations. Round your ratios to 2 decimal places and the working capitals to nearest dollar amount.Subtracted amount should be indicated with a minus) **So far I've only gotten about three of the acid-ratio tests correct and the rest are incorrect and I'm not sure why**

Search or enter web address 339,130 339.130 120,000 320/870 2.06 1:06 660,000 (60,000) 120 000 720.000 (26,000) 26.000 720,000 (27 500) ce May 8 224 1.43 399.130 459,130 26,000 Balance 320.870 May 10 320 87022 (27 500 , Balance 485,130 1.51 I 399,130 May 15 -T 457,630 . 293.370 -236e OT 30 399,130 Balance 692 500 1.56 May 17 692.500 1.56 399,130 293370 mi: 58,000 Balance 457,630 2 36 May 22 351 370 (58 000) 293 370 Balance 692.500 457.630 1/97 1 30 341.130 May 26 (58,000) (58,000) 2.16 127 341 130 634,500 100 0000 100,000 100,000 0 Balance 399,630 May 27 393 370 734,500 1200000120,000 Balance 499,630 187 May 28 854 500 19 630 393 370 Balance 217 01 461 130 May 29 (220,000)(220 000

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