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Question: 1. Compute Northtown's current? ratio, debt? ratio,and earnings per share. Round all ratios...

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Accounting

Question: 1. Compute Northtown's current? ratio, debt? ratio,and earnings per share. Round all ratios to ...

1.

ComputeNorthtown's current? ratio, debt? ratio, and earnings per share.Round all ratios to two decimal places.

2.

Computethe three ratios after evaluating the effect of each transactionthat follows. Consider each transactionseparately.

a.

Borrowed $105,000 on a? long-term note payable.

b.

On January? 1, Issued $30,000
shares of common? stock, receiving cash of $367,000.

c.

Paid? short-term notes? payable $24,000.

d.

Purchased merchandise of $45,000
on? account, debiting Inventory.

e.

Received cash on? account $23,000.

Cash………………………………………. $ 21,000      Accounts Payable……………. $100,000

Short-term investments………………….    33,000 Accruedliabilities……………….. 31,000

Accounts receivable, net………………..    86,000Long-term notes payable……… 166,000

Inventories………………………………. 144,000 Other long-term liabilities……..31,000

Prepaid expenses………………………      3,000 Net income…………………..    94,000

Total assets……………………………..    672,000 Number ofcommon

Short-term notes payable……………..     45,000 shares outstanding………….48,000

Requirement 1. Compute

Northtown'sNorthtown's

current? ratio, debt? ratio, and earnings per share. Round allratios to two decimal places.

Start by determining the formula for each? ratio, beginning withthe current? ratio, followed by the debt? ratio, and then earningsper share.

/

=

Current ratio

/

=

Debt ratio

(

-

) /

=

Earnings per share

Now compute

Northtown'sNorthtown's

current? ratio, debt? ratio, and earnings per share. ?(Round allratios to two decimal? places.)

Current ratio

Debt ratio

Earnings per share

Requirement 2. Compute the three ratios afterevaluating the effect of each transaction that follows. Considereach transaction

separately.

?(Round all ratios to two decimal? places.)

Current ratio

Debt ratio

Earnings per share

a.

b.

c.

d.

e.

Answer & Explanation Solved by verified expert
4.1 Ratings (532 Votes)
1 Current ratioCurrent assetsCurrent liabilities Current assets Cash 21000 Shortterm investments 33000 Accounts receivable net 86000 Inventories 144000 Prepaid expenses 3000 Total 287000 Current liabilities Shortterm notes payable 45000 Accounts Payable 100000 Accrued liabilities 31000 Total 176000 Current ratio287000176000163 Debt ratioTotal debtTotal assets Total debt Longterm notes payable 166000 Other longterm liabilities 31000 Total 197000 Debt ratio197000672000029 Earnings per shareNet incomeNumber of common shares outstanding9400048000 196 per share 2 a Borrowing of longterm notesCash increases by 105000 and Longterm notes payable    See Answer
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In: AccountingQuestion: 1. Compute Northtown's current? ratio, debt? ratio,and earnings per share. Round all ratios to...Question: 1. Compute Northtown's current? ratio, debt? ratio,and earnings per share. Round all ratios to ...1.ComputeNorthtown's current? ratio, debt? ratio, and earnings per share.Round all ratios to two decimal places.2.Computethe three ratios after evaluating the effect of each transactionthat follows. Consider each transactionseparately.a.Borrowed $105,000 on a? long-term note payable.b.On January? 1, Issued $30,000shares of common? stock, receiving cash of $367,000.c.Paid? short-term notes? payable $24,000.d.Purchased merchandise of $45,000on? account, debiting Inventory.e.Received cash on? account $23,000.Cash………………………………………. $ 21,000      Accounts Payable……………. $100,000Short-term investments………………….    33,000 Accruedliabilities……………….. 31,000Accounts receivable, net………………..    86,000Long-term notes payable……… 166,000Inventories………………………………. 144,000 Other long-term liabilities……..31,000Prepaid expenses………………………      3,000 Net income…………………..    94,000Total assets……………………………..    672,000 Number ofcommonShort-term notes payable……………..     45,000 shares outstanding………….48,000Requirement 1. ComputeNorthtown'sNorthtown'scurrent? ratio, debt? ratio, and earnings per share. Round allratios to two decimal places.Start by determining the formula for each? ratio, beginning withthe current? ratio, followed by the debt? ratio, and then earningsper share./=Current ratio/=Debt ratio(-) /=Earnings per shareNow computeNorthtown'sNorthtown'scurrent? ratio, debt? ratio, and earnings per share. ?(Round allratios to two decimal? places.)Current ratioDebt ratioEarnings per shareRequirement 2. Compute the three ratios afterevaluating the effect of each transaction that follows. Considereach transactionseparately.?(Round all ratios to two decimal? places.)Current ratioDebt ratioEarnings per sharea.b.c.d.e.

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