Indicate the effects of the transactions listed in the following table on total

Question

Indicate the effects of the transactions listed in the following table on total current assets, current ratios, and net income. Use (+) to indicate and increase (-) to indicate decrease and (0) to indicate either no effect. 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

Explanation / Answer

Hi, Please find the answers as follows: 1. Merchandise is sold for cash = +, +,+ 2. Federal income tax due for the previous year is paid = -, +, 0 3. A fixed asset is sold for less than book value = +, +,- 4. A fixed asset is sold for more than book value = +, +,+ 5. Merchandise is sold on credit = +, +,+ 6. Payment is made to trade creditors for previous purchases = -, +,0 7. A cash dividend is declared and paid = -,-,0 Thanks.

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