0.52 points CP10-1 Determining Financial Effects of Transactions Affecting Curre
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0.52 points CP10-1 Determining Financial Effects of Transactions Affecting Current Liabilities with Evaluation of Effects on the Debt-to-Assets Ratio [LO 10-2, LO 10-5] EZ Curb Company completed the following transactions. The annual accounting period ends December 31 Jan, 8 Purchased merchandise on account at a cost of $25,500. (Assume a perpetual inventory system.) 17 Paid for the January 8 purchase. Apr. 1 Received $58,400 from National Bank after signing a 12-month, 17.5 percent, promissory note June 3 Purchased merchandise on account at a cost of $29,500. 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 $12,900. (Use an account called Unearned Revenue.) Dec. 20 Collected $330 cash on account from a customer Dec. 31 Determined that wages of $11,100 were earned but not yet paid on December 31 (lgnore payroll taxes). Dec. 31 Adjusted the accounts at year-end, relating to interest. Dec. 31 Adjusted the accounts at year-end, relating to rent 1 For each listed transaction and related adjusting entry. indicate the accounts, amounts, and effects on on the accounting equation. (Do not round intermediate calculations. Enter any decreases to account balances with a minus sign. Enter your answers in transaction order provided in the problem statement) ith a minus sign Ente yo un emediate calculations enatsExplanation / Answer
Accounting Equation
Date
Assets
=
Liabilities+
Shareholder's Equity
8-Jan
Inventory
$ 25,500.00
Accounts Payable
$ 25,500.00
17-Jan
Cash
$ (25,500.00)
Accounts Payable
$ (25,500.00)
1-Apr
Cash
$ 58,400.00
Notes Payable
$ 58,400.00
3-Jun
Inventory
$ 29,500.00
Accounts Payable
$ 29,500.00
5-Jul
Cash
$ (29,500.00)
Accounts Payable
$ (29,500.00)
1-Aug
Cash
$ 12,900.00
Unearned Revenue
$ 12,900.00
20-Dec
Cash
$ 330.00
Accounts Receivables
$ (330.00)
31-Dec
Wages Payable
$ 11,100.00
Wages Expenses
$ (11,100.00)
31-Dec
Interest Payable
$ 7,665.00
Interest expense
$ (7,665.00)
31-Dec
Unearned Revenue
$ (10,750.00)
Rent Revenue
$ 10,750.00
Total
$ 71,300.00
$ 79,315.00
$ (8,015.00)
Effect on Debt to Asset ratio
Effect on ratio
Numerator
Denominator
8-Jan
No effect
$ 25,500.00
$ 25,500.00
17-Jan
No effect
$ (25,500.00)
$ (25,500.00)
1-Apr
No effect
$ 58,400.00
$ 58,400.00
3-Jun
No effect
$ 29,500.00
$ 29,500.00
5-Jul
No effect
$ (29,500.00)
$ (29,500.00)
1-Aug
No effect
$ 12,900.00
$ 12,900.00
20-Dec
No effect
$ -
$ 330.00
$ -
$ (330.00)
31-Dec
Increase
$ 11,100.00
$ -
31-Dec
Increase
$ 7,665.00
$ -
31-Dec
Decrease
$ (10,750.00)
$ -
Accounting Equation
Date
Assets
=
Liabilities+
Shareholder's Equity
8-Jan
Inventory
$ 25,500.00
Accounts Payable
$ 25,500.00
17-Jan
Cash
$ (25,500.00)
Accounts Payable
$ (25,500.00)
1-Apr
Cash
$ 58,400.00
Notes Payable
$ 58,400.00
3-Jun
Inventory
$ 29,500.00
Accounts Payable
$ 29,500.00
5-Jul
Cash
$ (29,500.00)
Accounts Payable
$ (29,500.00)
1-Aug
Cash
$ 12,900.00
Unearned Revenue
$ 12,900.00
20-Dec
Cash
$ 330.00
Accounts Receivables
$ (330.00)
31-Dec
Wages Payable
$ 11,100.00
Wages Expenses
$ (11,100.00)
31-Dec
Interest Payable
$ 7,665.00
Interest expense
$ (7,665.00)
31-Dec
Unearned Revenue
$ (10,750.00)
Rent Revenue
$ 10,750.00
Total
$ 71,300.00
$ 79,315.00
$ (8,015.00)
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