CP1O-1 Determining Financial Eirects oT Transactions Arecting Curre the Debt-to-
ID: 2561402 • Letter: C
Question
CP1O-1 Determining Financial Eirects oT Transactions Arecting Curre 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 $21,000. (Assume a perpetual inventory system.) 17 Paid for the January 8 purchase. Received $51,200 from National Bank after signing a 12-month, 13.0 percent, promissory Apr. 1 note June 3 Purchased merchandise on account at a cost of $25,000. 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 $10,200. (Use an account called Unearned Revenue.) Dec. 31 Determined that wages of $9,300 were earned but not yet paid on December 31 (ignole Dec 31 Delerminesd sho ware eae t not yet paid on December 31 (gnolt payroll taxes) Dec. 31 Adjusted the accounts at year-end, relating to interest Dec. 31 Adjusted the accounts at year-end, relating to rent For each listed transaction and related adjusting entry, indicate the accounts, amounts, and effects 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.) Required: . Date Assets Jan. 8Explanation / Answer
ans 1 Date Assets Liabilities Stockholder Equity 8-Jan Mercandise Inventory 21000 Accounts Payable 21000 17-Jan Cash -21000 Accounts Payable -21000 1-Apr Cash 51200 Notes payable 51200 3-Jun Mercandise Inventory 25000 Accounts Payable 25000 5-Jul Cash -25000 Accounts Payable -25000 1-Aug CAsh 10200 Unearned Revenue 10200 20-Dec CAsh 240 Accounts Receivable -240 31-Dec Salaries payable 9300 Salaries exp -9300 31-Dec Interest payable 4992 Interest expenses -4992 31-Dec Unearned Revenue -8500 Rent revenue 8500 working adjusting entries Unearned Revenue 10200/6*5 ` Interest (51200*13%*9/12) 4992 ans 2 Date Effect on ratio Numerator Denominator 8-Jan No effect 21000 21000 17-Jan No effect -21000 -21000 1-Apr No effect 51200 51200 3-Jun No effect 25000 25000 5-Jul No effect -25000 -25000 1-Aug No effect 10200 10200 20-Dec No effect 0 0 31-Dec Decrease 0 9300 31-Dec Decrease 0 4992 31-Dec Increase 0 -8500 If any doubt please comment