Total Effect Current Current on Net Assets Ratio Income a. Cash is acquired through issuance of additional common stock. b. Merchandise is sold for cash. C. Federal income tax due for the previous year is paid. d. A fixed asset is sold for less than book value. e. A fixed asset is sold for more than book value. f. Merchandise is sold on credit. g. Payment is made to trade creditors for previous purchases. h. A cash dividend is declared and paid. i. Cash is obtained through short-term bank loans. j. Short-term notes receivable are sold at a discount. k. Marketable securities are sold below cost. I. Advances are made to employees. m. Current operating expenses are paid. Short-term promissory notes are issued to trade creditors in exchange for past due accounts payable. n. 10-year notes are issued to pay off accounts payable. O. A fully depreciated asset is retired. p. q. Accounts receivable are collected. r. Equipment is purchased with short-term notes. S. Merchandise is purchased on credit. t. The estimated taxes payable are increased.

Question

Indicate the effects of the transactions listed in the following table on total current assets,
current ratio, and net income. Use (1) to indicate an increase, (2) to indicate a decrease,
and (0) to indicate either no effect or an indeterminate effect. Be prepared to state any
necessary assumptions and assume an initial current ratio of more than 1.0. (Note: A good
accounting background is necessary to answer some of these questions; if yours is not
strong, answer the questions you can.)

Total
Effect
Current
Current
on Net
Assets
Ratio
Income
a.
Cash is acquired through issuance of additional
common stock.
b.
Merchandise is sold for cash.
C.
Federal income tax due for the previous year is paid.
d.
A fixed asset is sold for less than book value.
e.
A fixed asset is sold for more than book value.
f.
Merchandise is sold on credit.
g.
Payment is made to trade creditors for previous purchases.
h.
A cash dividend is declared and paid.
i.
Cash is obtained through short-term bank loans.
j.
Short-term notes receivable are sold at a discount.
k.
Marketable securities are sold below cost.
I.
Advances are made to employees.
m.
Current operating expenses are paid.
Short-term promissory notes are issued to trade creditors
in exchange for past due accounts payable.
n.
10-year notes are issued to pay off accounts payable.
O.
A fully depreciated asset is retired.
p.
q.
Accounts receivable are collected.
r.
Equipment is purchased with short-term notes.
S.
Merchandise is purchased on credit.
t.
The estimated taxes payable are increased.
Expand
Transcribed Image Text

Total Effect Current Current on Net Assets Ratio Income a. Cash is acquired through issuance of additional common stock. b. Merchandise is sold for cash. C. Federal income tax due for the previous year is paid. d. A fixed asset is sold for less than book value. e. A fixed asset is sold for more than book value. f. Merchandise is sold on credit. g. Payment is made to trade creditors for previous purchases. h. A cash dividend is declared and paid. i. Cash is obtained through short-term bank loans. j. Short-term notes receivable are sold at a discount. k. Marketable securities are sold below cost. I. Advances are made to employees. m. Current operating expenses are paid. Short-term promissory notes are issued to trade creditors in exchange for past due accounts payable. n. 10-year notes are issued to pay off accounts payable. O. A fully depreciated asset is retired. p. q. Accounts receivable are collected. r. Equipment is purchased with short-term notes. S. Merchandise is purchased on credit. t. The estimated taxes payable are increased.

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Accounting

Financial Accounting

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: With reference to relevant legislation, case law and secondary sources, briefly explain different fu...

A: Taxes are the mandatory payments to be made by the citizens of the nation and other corporate entiti...

Q: For (A), I think there a mistake in (A), are you certain its labour hour not machine hour? For (B), ...

A: For A  Under traditional costing manufacturing overheads are allocated either on the basis of labour...

Q: Part 1 Liverpool Manufacturing Limited   Liverpool Manufacturing Limited developed the following sta...

A: Hey, since there are multiple requirements posted, we will answer the first three requirements. If y...

Q: Preparing a statement of retained earnings Kingston, Inc. had beginning retained earnings of $135,00...

A: Ending retained earnings = Beginning retained earnings + Net Income - Dividend declared  

Q: What challenges might managers at Neuro Instruments encounter in achieving the target cost? How migh...

A: Managers at Neuro Instruments might encounter following challenges in achieving the target cost: Or...

Q: Determine the maturity date for the following note. Consider leap years as necessary. Date of Note T...

A: The correct answer is January 6, 2010.

Q: Revenue is usually recognized at the point of sale (a point in time). Under special circumstances, h...

A: Revenue recognition:   GAAP (Generally accepted accounting principle) states that under specific con...

Q: The capital balance for Messalina is $210,000 and for Romulus is $140,000. These two partners share ...

A: Given information is: The capital balance for Messalina is $210,000 and for Romulus is $140,000. The...

Q: A company began its fiscal year with inventory of $186,000. Purchases and cost of goods sold for the...

A: Periodic Inventory System: Under this system, the balance of the merchandise inventory is not adjust...

Q: Wages due but not paid $1800 Electricity bill due but not paid amounting to $450 Insurance had been ...

A:  Journal entries Date   Particulars Debit ($)  Credit ($)    Wages Account 1,800 ...

Q: Calculating Return on Assets Alice Appliance Service had net income for the year of $58,500. In addi...

A: Calculation of Total assets: Particulars Jan. 1, 2018 Dec 31, 2018 Cash $34,000 $134,200 Offi...

Q: Presented below is information related to Kaisson Corporation for the last 3 years.       Base-Ye...

A: Click to see the answer

Q: Problems 18–25 assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus,...

A: (a) (1) IFRS:   The impairment is recorded under IFRS if the book value of the brand name is more th...

Q: Fool’s Paradise Ltd had cash and cash equivalents at 1 January 2019 of $400,000. The transactions of...

A: Statement of Cash Flow of Fool's paradise Ltd for the year to December 31 , 2019.  

Q: The general fund of a city reports assets of $300,000 and liabilities of $200,000 in the fund financ...

A: Fund balance—non-spendable of $40,000: The non-spendable balance represent the amount which cannot b...

Q: Provide one example where information is relevant and faithfully represented

A: The general-purpose financial statements are prepared to provide useful information to its users.  A...

Q: Assume that in an annual audit of Harlowe Inc. at December 31, 2020, you find the following transact...

A:     Items Included / Not included with reason 1 A special machine, fabricated to order f...

Q: RCK Ltd issues a prospectus inviting the public to subscribe for 90 million ordinary shares of $2.00...

A: Pro rata allotment means to proportionate the shares allotted in accordance to the share applied and...

Q: A. Alex purchased a CNC machine on 1st October 2019 at a cost of $110,000 (including GST). This mach...

A: Prime cost method: It is also called as straight-line method; in this method the value of asset decr...

Q: Judy Schaeffer is getting up to speed on the new guidance on revenue recognition. She is trying to u...

A: Click to see the answer

Q: Partial-productivity measurement. Gable Company manufactures wallets from fabric. In 2016, Gable mad...

A: Partial productivity:   Partial productivity is a tool to measure such processes which do not have t...

Q: Choose the correct.On March 1, Pimlico Corporation (a U.S.-based company) expects to order merchandi...

A: The correct answer is Option (a).

Q: Identifying the benefits of standard costs Setting standards for a product may involve many employee...

A: Definition:   Standard costing is very important for a business. This is used to control the costs o...

Q: The Rins own a home in Boston. They paid $780,000 for their home three years ago. Their current bala...

A: Compute the total mortgage amount:   Particulars Amount ($) Current mortgage on main home ...

Q: Changing the estimated life of an asset Assume that Smith’s Auto Sales paid $45,000 for equipment wi...

A: Depreciation is the loss in the value of the asset caused due to its usage, wear and tear. There are...

Q: Amandeep born in India and migrated to Australia.  He lives in Australia permanently. He still holds...

A: Income tax expense:   The expenses which are related to the taxable income of the individuals and b...

Q: On September 1, 2017, Jensen Company received an order to sell a machine to a customer in Canada at ...

A: Calculate the impact on net income:  

Q: The following is the description of cash disbursements system of Two Symbols Limited:Upon receipt of...

A: Internal Controls:   Internal controls are the controls established within an organization to check ...

Q: Choose the correct. An order for relief creates an automatic stay that:a. Prohibits creditors from t...

A: An order for relief creates an automatic stay that gives an insolvent company time to file a volunta...

Q: Estimate ending inventory and cost of goods sold using the retail inventory method, applying the var...

A: The retail inventory method is an accounting method used to estimate the value of a store's merchand...

Q: Bonds that can be exchanged for stock are called: Group of answer choices debenture bonds serial...

A: Convertible Bonds: These bonds are issued by corporations and that can be converted to shares of the...

Q: Identify the three common forms of business organization and the primary difference between the way ...

A: Business organization refers to an entity that is formed to carry on a commercial enterprise to meet...

Q: Ricky Fowler borrowed $70,000 on March 1, 2018. This amount plus accrued interest at 6% compounded s...

A: Present Value: The value of today’s amount to be paid or received in the future at a compound inter...

Q: Explain the purpose of Generally Accepted Accounting Principles (GAAP), including the organization c...

A: Generally Accepted Accounting Principles:   It refers to a set of guidelines for the purpose for the...

Q: Define Monetary unit assumption.

A: Money measurement assumptions: As per the money measurement assumptions, only quantifiable transacti...

Q: RCK Ltd issues a prospectus inviting the public to subscribe for 90 million ordinary shares of $2.00...

A: Journal entries are the transactions that are recorded in the primary book. They are chronological i...

Q: Sweet Tastings is considering increasing its selling price to $13 per case. Assuming production and ...

A: Rate of return (ROI) helps in measuring the losses or gains created on an investment comparative wit...

Q: On April 19, 2021, Millipede Machinery sold a tractor to Thomas Hartwood, accepting a note promising...

A: Note receivable: Note receivable refers to a written promise received by the creditor from the debto...

Q: Using the flowchart provided below, identify control problems, related risks of the problem and corr...

A: A cost accountant is different than a cost accountant when we talk about performing duties. The prob...

Q: help me with the steps to solve it

A: The correct option is option d.

Q: April 12: Earned $17,000 in fees and billed customers. Type out all account names completely. Do not...

A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. Th...

Q: The costs of legal, promotional, and accounting services necessary to effect the sale of shares are ...

A: Share issue cost: Cost such as legal fee, promotional charge, and accounting services incurred for t...