25.00 points P810-1 Determining Financial Effects of Transactions Affecting Curr

Question

25.00 points P810-1 Determining Financial Effects of Transactions Affecting Current Liabilties with Evaluation of Effects on the Debt-to-Assets Ratio LO 10-2, LO 10-5 Tiger Company complatied tre folowing traneactions The annual accourning perlied ands December 31 Jan 3 Puchased merchandise on account st a cost af $37.000 (Assumeprpetusl imventory an. 27 Paid or tha January 3 purchase Aer 1 Received $93,000 from Ataric Bark wter signing a 12-mh, 80 peroet promissery note June 13 Purchased merchandise on account at a cot of 510 600 July 25 Paid for the June 13 purchase Red out a smak office in s huldng owned by Tigar Company and colected eigh t in advuncs amounting to $10.00 (Use an account cakd Unarned Rent Revene Dec 31 Datemined wiagms of $25090 were eamed but sof yol pard on Deceber 3 go Dec. 31 Required d accounts at year-end. relating to rent 1. For each Rsted trassacton and related adunting untry ind cals Bie accousts, amousts, and efeos of ?Do not suund ?stermediote cokvlation. sqatan Eren' ary detra, sesto torn balances with a minin sign Enter your anwers in trtsaction coder proied o the rotilen Matemest pr t ly 25 Dec 31

Explanation / Answer

Part 1:

Date

Assets

Liabilities

Shareholders' equity

Jan-03

Inventory

37000

Accounts payable

37000

Jan-27

Cash

-37000

Accounts payable

-37000

Apr-01

Bank

93000

Notes payable

93000

Jun-13

Inventory

10610

Accounts payable

10610

Jul-25

Cash

-10610

Accounts payable

-10610

Aug-01

Cash

10600

Unearned rent revenue

10600

Dec-31

Wages payable

25000

Wages

-25000

Dec-31

Interest payable

5580

Interest (93000 x 8% x 9/12)

-5580

Dec-31

Unearned rent revenue

-10600

Rent

10600

Part 2:

Date

Effect

Numerator

Denominator

Jan-03

Reduction in debt to asset ratio

37000

Jan-27

Increase in debt to asset ratio

37000

Apr-01

Both asset and debt will increase

93000

93000

Jun-13

Reduction in debt to asset ratio

10610

Jul-25

Increase in debt to asset ratio

-10610

Aug-01

Reduction in debt to asset ratio

10600

Dec-31

No effect

Dec-31

No effect

Dec-31

No effect

Part 1:

Date

Assets

Liabilities

Shareholders' equity

Jan-03

Inventory

37000

Accounts payable

37000

Jan-27

Cash

-37000

Accounts payable

-37000

Apr-01

Bank

93000

Notes payable

93000

Jun-13

Inventory

10610

Accounts payable

10610

Jul-25

Cash

-10610

Accounts payable

-10610

Aug-01

Cash

10600

Unearned rent revenue

10600

Dec-31

Wages payable

25000

Wages

-25000

Dec-31

Interest payable

5580

Interest (93000 x 8% x 9/12)

-5580

Dec-31

Unearned rent revenue

-10600

Rent

10600

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