Question

Tiger Company completed the following transactions. The annual accounting period ends December 31. Jan. 3 Purchased merchandise on account at a cost of $29,000. (Assume a perpetual inventory system.) Jan. 27 Paid for the January 3 purchase. Apr. 1 Received $85,000 from Atlantic Bank after signing a 12-month, 8.0 percent promissory note. June 13 Purchased merchandise on account at a cost of $9,000. July 25 Paid for the June 13 purchase. July 31 Rented out a small office in a building owned by Tiger Company and collected eight months' rent in advance amounting to $9.000 Dec. 31 Determined wages of $17,000 were earned but not yet paid on December 31 (Ignore payroll taxes). Dec. 31 Adjusted the accounts at year-end, relating to interest. Dec. 31 Adjusted the accounts at year-end, relating to rent. Required: 1. For each listed transaction and related adjusting entry, indicate the accounts, amounts, and effects on the accounting equation. 2. For each item, indicate whether the debt-to-assets ratio is increased or decreased or there is no change. (Assume Tiger Company's debt-to-assets ratio is less than 1.0.) Complete this question by entering your answers in the tabs below. Required 1 Required 2 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 as liabilities, or stockholders equity with a minus sign. Enter your answers in transaction order provided in the problem statement.) Assets Liabilities Stockholders' Equity Date Jan. 3 Jan. 27 Apr. 1 June 13 July 25 July 31 Dec. 31 Dec. 31 Dec. 31 Required 1 Required 2 >

Answer 1

Ans 1 Assets Date Jan 3 Jan 27 Apr 1 June 13 July 25 July 31 Dec 31 Dec 31 Dec 31 Balance Inventory Invento Cash Cash Inventory Cash Cash Liabilities $29,000 Accounts Payable ($29,000) = Accounts Payable $85,000 = Notes Payable $9,000 = Accounts Payable ($29,000) = Accounts Payable $9,000 = Deferred Rent Revenue = Wages Payable = Interest Payable = Deferred Rent Revenue $74,000 = Stockholder's Equity $29,000 + ($29,000) + $85,000 + $9,000 + ($29,000) + $9,000 + $17,000 + Retained Earnings ($17,000) $5,100 + Retained Earnings ($5,100) [($85000 x 8%)/12 x 9) $5,625 + Retained Earnings ($5,625)|($9000/ 8 x 5] $101,725 + ($27,725) Ans 2 Debt to Asset Ratio = Total Liabilities/Total Assets This assumption is taken for better understanding of the imapct on debt to assets ratio Total Liabilities $80,000 Total Assets $100,000 Debt to Asset Ratio 0.80 Date Effect on Ratio Numerator Denominator Increases Increases Increases Jan 3 Jan 27 Apr 1 June 13 July 25 July 31 Dec 31 Dec 31 Dec 31 No Change Increases Increases Decrease Increases Increases Increases Increases Decrease Increases Increases Decrease Increases Increases Increases Increases Decrease Increases Increases Decrease Increases No Change No Change No Change Calculation is done for understanding purpose Total Liabilities Total Assets after after the Ratio the transaction transaction (A) (A)/(B) $109,000 $129,000 $80,000 $100,000 $165,000 $185,000 $174,000 $194,000 $145,000 $165,000 $154,000 $174,000 $171,000 $174,000 $176,100 $174,000 $181,725 $174,000 1.04