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Unformatted text preview: E3-14 1. Current Assets = 2,800,000 2. Shareholder’s Equity = 3,640,000 3. Noncurrent Assets = 840,000 4. Long-term liabilities = 1/2800000 X 2.25 = 8.036 ^-07 E3-15 Action Issuance of long-term bonds Issuance of short-term notes Payment of accounts payable Purchase of inventory on accounts Purchase of inventory for cash Purchase of equipment with a 4-year note Retirement of bonds Sale of common stock Write-Off of obsolete inventory Purchase of short-term investment for cash Decision to refinance on a long-term basis some currently maturing debt Current Ratio N D D D N N D N D N D Acid-Test Ratio N D D D N N D N D N D Debt to Equity Ratio D N D I N I N D N I N Judgment Case 3-4 1. There should be a note stating land is being held for sale and the amount received should be credited to land and debited to cash. There should also be a note added to accounts payable for rent for the building. 2. Since the note receivable is due in 2008, it should be notated. It should be disclosed that $3,000 of notes receivable balance is for interest that is due July 2007. 3. It should be noted that $20,000 is due in annual installments and what it is for. 4. It should be disclosed that management does not intend to liquidate any investments in the coming year. It should be noted that the company’s investments consist of marketable securities of other corporations. ...
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