Reference no: EM13867402
Determining Financial Effects of Transactions Affecting Current Liabilities with Evaluation of Effects on the Debt-to-Assets Ratio Tiger Company completed the following transactions. The annual accounting period ends December 31.
Jan. 3 purchased merchandise on account at a cost of $ 24,000. (Assume a perpetual inventory system.) Jan. 27 Paid for the January 3 purchase.
Apr. 1 received $ 80,000 from Atlantic Bank after signing a 12-month, 5 percent promissory note.
June 13 purchased merchandise on account at a cost of $ 8,000.
July 25 Paid for the June 13 purchase.
Aug. 1 Rented out a small office in a building owned by Tiger Company and collected eight months rent in advance amounting to $ 8,000. (Use an account called Unearned Revenue.)
Dec. 31 Determined wages of $ 12,000 were earned but not yet paid on December 31 (ignore payroll taxes).
Dec. 31 adjusted the accounts at year-end, relating to interest.
Dec. 31 adjusted the accounts at year-end, relating to rent.
Required:
1. For each listed transaction and related adjusting entry, indicate the accounts, amounts, and effects (+ for increase, for decrease, and NE for no effect) on the accounting equation, using the following format:
2. For each item, state whether the debt-to-assets ratio is increased or decreased or there is no change. (Assume Tiger Company's debt-to-assets ratio is less than 1.0.)
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