(Note: Consider completing this problem after Problem 13-1 to ensure that you obtain a clear…

 
   

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(Note: Consider completing this problem after Problem 13-1 to ensure that you obtain a clear understanding of the effect of various transactions on these measures of liquidity.)The following account balances are taken from the records of Veriform Inc.:Cash ……………. $ 70,000Short-term investments …….. 60,000Accounts receivable ………. 80,000Inventory …………… 100,000Prepaid insurance ………… 10,000Accounts payable ………… 75,000Taxes payable ………… 25,000Salaries and wages payable …….. 40,000Short-term loans payable ……… 210,000Required1. Use the information provided to compute the amount of working capital and Veriform’s current and quick ratios (round to three decimal points).2. Determine the effect that each of the following transactions will have on Veriform’s working capital, current ratio, and quick ratio by recalculating each and then indicating whether the measure is increased, decreased, or not affected by the transaction. (For the ratios, round to three decimal points.) Consider each transaction independently; that is, assume that it is the only transaction that takesplace.
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Note Consider completing this problem after Problem 13 1 to en