indicate whether the amount of working capital will increase decrease or be unaffect 626162

Tulip Products, Inc., has a current ratio on 2010 December 31, of 2:1 before the following transactions were completed:

• Sold a building for cash.

• Exchanged old equipment for new equipment. (No cash was involved.)

• Declared a cash dividend on preferred stock.

• Sold merchandise on account (at a profit).

• Retired mortgage notes that would have matured in 2011.

• Issued a stock dividend to common stockholders.

• Paid cash for a patent.

• Temporarily invested cash in government bonds.

• Purchased inventory for cash.

• Wrote off an account receivable as uncollectible. Uncollectible amount is less than the balance of the Allowance for Uncollectible Accounts.

• Paid the cash dividend on preferred stock that was declared earlier.

• Purchased a computer and gave a two-year promissory note.

• Collected accounts receivable.

• Borrowed from the bank on a 120-day promissory note.

• Discounted a customer”s note. Interest expense was involved.

Consider each transaction independently of all the others.

a. Indicate whether the amount of working capital will increase, decrease, or be unaffected by each of the transactions.

b. Indicate whether the current ratio will increase, decrease, or be unaffected by each of the transactions.