State whether the quick ratio is increased decreased

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Reference no: EM13301162

EZ Curb Company completed the following transactions during 2010. The annual accounting period ends December 31, 2010.

Jan. 8

Purchased merchandise on account at a cost of $14,000. (Assume a perpetual inventory system.)

17 Paid for the January 8 purchase.
Apr. 1

Received $40,000 from National Bank after signing a 12-month, 6 percent, promissory note.

June 3 Purchased merchandise on account at a cost of $18,000.
July 5 Paid for the June 3 purchase.
Aug. 1

Rented out a small office in a building owned by EZ Curb Company and collected six months' rent in advance amounting to $6,000. (Use an account called Unearned Rent Revenue.)

Dec. 20

Received a $100 deposit from a customer as a guarantee to return a large trailer "borrowed" for 30 days.


(TIP: Consider whether EZ Curb Company has an obligation to return the money when the trailer is returned.)

Dec. 31

Determined that wages of $6,500 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.

Requirement 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

Requirement 2:

For each transaction and related adjusting entry, state whether the quick ratio is increased,decreased, or there is no change. (Assume EZ Curb Company's quick ratio has always been greater than 1.0.)

Reference no: EM13301162

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