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Indicate the effect of each item on a Company’s working capital, current ratio, and acid-test ratio. Use + for increase, – for decrease, and (NE) for no effect.
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 2013.
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