Effect of transactions on current ratio and working capital
Sherman Manufacturing has a current ratio of 3:1 on December 31, 2011. Indicate whether each of the following transactions would increase (+), decrease (), or have no affect (NA) Shermanâ€™s current ratio and its working capital.
Â a. Paid cash for a trademark.
Â b. Wrote off an uncollectible account receivable.
Â c. Sold equipment for cash.
Â d. Sold merchandise at a profit (cash).
Â e. Declared a cash dividend.
Â f. Purchased inventory on account.
Â g. Scrapped a fully depreciated machine (no gain or loss).
Â h. Issued a stock dividend.
Â i. Purchased a machine with a long-term note.
Â j. Paid a previously declared cash dividend.
Â k. Collected accounts receivable.
Â l. Invested in current marketable securities.