Edward Allen Interiors Inc. is a leading manufacturer and retailer of home furnishings in the United States and abroad.

Question

Edward Allen Interiors Inc. is a leading manufacturer and retailer of home furnishings in the United States and abroad. The following is adapted from Edward Allen's September 30, 2016, trial balance. (The amounts shown represent millions of dollars.) $ Accounts Payable Accounts Receivable Cash Common Stock Equipment Inventory Notes Payable (long-term) Notes Payable (short-term) Prepaid Rent Retained Earnings Salaries and Wages Payable Software 71 23 126 41 340 162 200 18 361 33 40 Assume that the following events occurred in the following quarter. a. Paid $35 cash for additional inventory. b. Issued additional shares of common stock for $30 in cash. c. Purchased equipment for $220; paid $105 in cash and signed a note to pay the remaining $115 in two years. d. Signed a short-term note to borrow $14 cash. e. Conducted negotiations to purchase a sawmill, which is expected to cost $48. 7-a. Use your response to part 6 to calculate Edward Allen's current ratio after the transactions listed

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Current ratio after transaction (a) -(e) 2.21 Working Accounts Receivable Cash Inventory Prepaid rent Accounts payable Notes payable (short term) Salaries and wages payable Beginning balances $ 23 $ 126 $ 162 $ 18 $ 71 $ 3 $ 33 Transaction a $ (35) $ 35 Transaction b $ 30 Transaction c $ (105) Transaction d $ 14 $ 14 Transaction e Balances after Transactions $ 23 $ 30 $ 197 $ 18 $ 71 $ 17 $ 33 . Transaction (e) will not be recorded anywhere in books. Accounts Receivable $ 23 Cash $ 30 Inventory $ 197 Prepaid rent $ 18 Total current assets (A) $ 268 Accounts payable $ 71 Notes payable (short term) $ 17 Salaries and wages payable $ 33 Total current liabilities(B) $ 121 Current ratio (A/B) 2.21

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Edward Allen Interiors Inc

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	Accounts Receivable	Cash	Inventory	Prepaid rent	Accounts payable	Notes payable (short term)	Salaries and wages payable
Beginning balances	$ 23	$ 126	$ 162	$ 18	$ 71	$ 3	$ 33
Transaction a		$ (35)	$ 35
Transaction b		$ 30
Transaction c		$ (105)
Transaction d		$ 14				$ 14
Transaction e
Balances after Transactions	$ 23	$ 30	$ 197	$ 18	$ 71	$ 17	$ 33

Accounts Receivable	$ 23
Cash	$ 30
Inventory	$ 197
Prepaid rent	$ 18
Total current assets (A)	$ 268
Accounts payable	$ 71
Notes payable (short term)	$ 17
Salaries and wages payable	$ 33
Total current liabilities(B)	$ 121
Current ratio (A/B)	2.21