Problem
Selected balance sheet accounts for Tibbetts Company on September 30, 2016, are as follows:
Cash $ 41,600
Marketable securities 117,000
Accounts receivable, net 143,000
Inventory 162,500
Prepaid expenses 18,200
Total current assets $ 482,300
Accounts payable $ 108,000
Other accrued liabilities 26,400
Short-term debt 48,000
Total current liabilities $ 182,400
Required:
a. Calculate the working capital, current ratio, and acid-test ratio for Tibbetts Company as of September 30, 2016.
b. Summarized here are the transactions/events that took place during the fiscal year ended September 30, 2017.
1.Credit sales for the year amounted to $312,000. The cost of goods sold was $202,800.
2.Collected accounts receivable, $327,600.
3.Purchased inventory on account, $218,400.
4.Issued 650 shares of common stock for $23 per share.
5.Wrote off $9,100 of uncollectible accounts using the allowance for bad debts.
6.Declared and paid a cash dividend, $26,000.
7.Sold marketable securities costing $33,800 for $40,300 in cash.
8.Recorded insurance expense for the year, $15,600. The premium for the policy was paid in June 2016.
9.Borrowed cash on a short-term bank loan, $13,000.
10.Repaid principal of $52,000 and interest of $3,900 on a long-term bank loan.
b-1. Prepare journal entries for the above transactions.