sells a wide range of inventories, which are initially purchased on account. Ooc
ID: 2565066 • Letter: S
Question
sells a wide range of inventories, which are initially purchased on account. Oocasionally, a short- wrm note payable is used te otetain cash for ourrent use. The following transactions wene soleciled On Jenuary 10, purchased merchandise on credt for $ 18,000. The company uses a perpehual inventory of $40,000, due at the end of six monts, aocnuing interest at an annual rate of 8 pencent, payable at from those oocurring during the year 1. For each of the transactions, indicate the accounts, amounts, and effects on the accounting equation (Enter any decreases to account balances with a minus sign.) 18,000 18,000Accounts Payable January 10 March 1 Inventory 40,000 2 What amount of cash is paid on the maturity date of the note? 41,600 3. Indicate the impact of each transaction (increase, decrease, and NE for no efect) on the debt-to-assets ratio. Assume Bryant Company had $300,000 in total lablities and 500,000 in total assets, yielding a debt-to-assets ratio of 0.60, prior to each tansaction. (Round your answer to 2 decimal places) FI F3 FS 8 2 4Explanation / Answer
3) Debt to asset ratio = Total Liabilities/ Total Asset
Prior transaction Debt to asset ratio = $300,000/$500,000 = 0.60
After transaction Debt to asset ratio
1) Date Assets = Liabilities + Stock holder’s equity 10-Jan Inventory 18000 Creditors for inventory 18000 NE 1-Mar Cash 40000 Notes payable 40000 NE 2) 31-Aug Principal 40000 Interest 1600 (40000*8%*6/12) Total Cash paid 41600Related Questions
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