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Show the Effect of the Following Transactions on Cash, Net

question 80

Essay

Show the effect of the following transactions on cash, net working capital, and the current ratio. Assume that the current ratio exceeds 1.0 to begin.
a. The firm borrows $1,000 short term and pays $500 in accounts payable.
b. The firm factors $1,000 in receivables at a 5% discount.
c. The firm issues $1,000 in long-term bonds, using the proceeds to pay $800 in payables and purchase $200 in marketable securities.


Definitions:

Ferns

Non-flowering vascular plants that reproduce via spores and are characterized by their fronded leaves.

Gymnosperms

A group of seed-producing plants that includes conifers, cycads, Ginkgo, and gnetophytes, distinguished by their naked seeds not enclosed in an ovary.

Rhizoids

Hair-like structures on the surface of plants, fungi, and algae that absorb water and nutrients and anchor the organism to the substrate.

Mosses

Small, non-vascular plants that typically form dense green clumps or mats, often in moist or shady locations.

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