RequiredIndicate the effect of each of the following transactions on (1) the current ratio, (2) working capital, (3) stockholder
s’ equity, (4) book value per share of common stock, and (5) retained earnings. Assume that the current ratio is greater than 1:1. (Indicate the effect of each transactions by selecting "+" for increase, "–" for decrease, and "NC" for no change.)a. Collected account receivable.b. Wrote off account receivable.c. Converted a short-term note payable to a long-term payable.d. Purchased inventory on account.e. Declared cash dividend.f. Sold merchandise on account at a profit.g. Issued stock dividend.h. Paid account payable.i. Sold building at a lossdo a +, -. or NC for each one.Current Ratioa.b.c.d.e.f.g.h.i.Working Capitala.b.c.d.e.f.g.h.i.Stockholders Equitya.b.c.d.e.f.g.h.i.Book Valuea.b.c.d.e.f.g.h.i.Retained Earningsa.b.c.d.e.f.g.h.i.
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Answer and Explanation:
The preparation of the analysis shows whether the assemblies should process further or not is presented below:
Differential revenue (38,000 units × ($51 - $44)) $266,000
Differential costs:
Direct material (38,000units × $2 per unit) ($76,000)
Direct labor (38,000units × $2 per unit) ($76,000)
Variable overhead (38,000units × $1 per unit) ($38,000)
Fixed costs ($160,000 - $225,000) ($65,000)
Additional income (loss) from processing further $11,000
Since the amount comes in positive so it should be processed further
