Compute the working capital, the current ratio, and the quick ratio after each of the fol-
lowing transactions, and record the results in the appropriate columns. Consider each trans-
action separately and assume that only that transaction affects the data given above. Round
to two decimal places.
a. Sold marketable securities at no gain or loss, $56,000.
b. Paid accounts payable, $60,000.
c. Purchased goods on account, $80,000.
d. Paid notes payable, $40,000.
e. Declared a cash dividend, $25,000.
f. Declared a common stock dividend, $28,500.
g. Borrowed cash from bank on a long-term note, $120,000.
h. Received cash on account, $164,000.
i. Issued additional shares of stock for cash, $250,000.
j. Paid cash for prepaid expenses, $10,000.The comparative financial statements of Vision International, Inc., are as follows. The market
price of Vision International, Inc., common stock was $20 on December 31, 2007.672 Chapter 14 Financial Statement Analysis
Problem 14-4A
Nineteen measures of
solvency and profitability
Goals2, 3, 4, 5- Number of days’ sales in
receivables, 63.3
Vision International, Inc.
Comparative Retained Earnings Statement
For the Years Ended December 31, 2007 and 20062007 2006
Retained earnings, January 1 $375,000 $327,000
Add net income for year 68,000 67,000
Total $443,000 $394,000
Deduct dividends:
On preferred stock $ 15,000 $ 12,000
On common stock 7,000 7,000
Total $ 22,000 $ 19,000
Retained earnings, December 31 $421,000 $375,000Vision International, Inc.
Comparative Income Statement
For the Years Ended December 31, 2007 and 20062007 2006
Net sales $1,050,000 $960,000
Cost of goods sold 400,000 390,000
Gross profit $ 650,000 $570,000
Selling expenses $ 270,000 $275,000
Administrative expenses 195,000 165,000
Total operating expenses $ 465,000 $440,000
Income from operations $ 185,000 $130,000
Other income 20,000 15,000
$ 205,000 $145,000
Other expense (interest) 96,000 48,000
Income before income tax $ 109,000 $ 97,000
Income tax expense 41,000 30,000
Net income $ 68,000 $ 67,000