You are provided with the following transactions that took place during the year. /dentify the impact of transactions on ratios.

(SO 5)

Current aa Cash Cash Free Debt Debt Cash Coverage Coverage Flow Ratio Ratio Transactions ($125,000) (0.5 times) (0.3 times)

(a) Recorded credit sales $2,500.

(b) Collected $1,500 owing from customers.

(c) Paid amount owing to suppliers $2,750.

(d) Recorded sales returns of $500 and credited the customer’s account.

(e) Purchased new equipment $5,000;

signed a long-term note payable for the cost of the equipment.

(f) Purchased a patent and paid $15,000 cash for the asset.

Instructions For each transaction listed above, indicate whether it will increase (I), decrease (D), or have no effect (NE) on the ratios.