The balance sheet of Walgreens a leading chain drugstore, as of August

QUESTION

The balance sheet of Walgreens a leading chain drugstore, as of August 31, 2009, appear as follows (dollars in million):REQUIRED: Assume that the following eight transactions occurred that next year (dollars in millions). Indicate the effect of each transaction on net income (revenues minus expenses), the current ratio (current assets divided by current liabilities), working capital (current assets minus current liabilities), and the debt/equity ratio (total liabilities divided by total shareholders equity) of Walgreens. Use the following key: increase (+), decrease (), no effect (NE). Treat each transactionindependently.
Transaction Net Income Current Ratio Working Capital Debt/Equity Ratio 1 Issued ownership shares for $ 100 each No effect + + “ 2 Purchased equipment costing $ 95 for cash No effect “ “ No effect 3 Paid off a $ 200 long term liability No effect “ + “ 4 Sold inventory costing $ 500 for $ 685 cash + + + No effect 5 Declared a $ 152 dividend¦

ut have not paid “ “ “ + 6 Paid $ 200 in wages payable “ + No effect + 7 Received $ 75 from customers on account No effect No effect No effect No effect 8 Incurred and paid $ 30 in interest on short term payables “ + “ No effect

ANSWER:

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