Problem: What are the effects of these transactions + increase, - decrease, and 0 no effect, assuming a Current Ratio of more than 1 to 1:
Total Effect
Current Current on Net
Assets Ratio Income
a. Cash is acquired through issuance of additional common stock.
b. Merchandise is sold for cash.
c. Federal income tax due for the previous year is paid.
d. A fixed asset is sold for less than book value.
e. A fixed asset is sold for more than book value.
f. Merchandise is sold on credit.
g. Payment is made to trade creditors for previous purchases.
h. A cash dividend is declared and paid.
i. Cash is obtained through short-term bank loans.
j. Short-term notes receivable are sold at a discount.