The following account balances are taken from the records of Monet’s Garden Inc.:
Current liabilities ..................................................$150,000
Long-term liabilities ...............................................375,000
Stockholders’ equity ...............................................400,000

Required
1. Use the information provided to compute Monet’s debt-to-equity ratio (round to three decimal points).
2. Determine the effect that each of the following transactions will have on Monet’s debt-to equity ratio by recalculating the ratio and then indicating whether the ratio is increased, decreased, or not affected by the transaction. (Round to three decimal points.) Consider each transaction independently; that is, assume that it is the only transaction that takes place.

Transaction                                                                                        Effect of Transaction on 

                                                                                                                Debt-to Equity Ratio
a. Purchased inventory on account, $20,000
b. Purchased inventory for cash, $15,000
c. Paid suppliers on account, $30,000
d. Received cash on account, $40,000
e. Paid insurance for next year, $20,000
f. Made sales on account, $60,000
g. Repaid short-term loans at bank, $25,000
h. Borrowed $40,000 at bank for 90 days
i. Declared and paid $45,000 cash dividend
j. Purchased $20,000 of short-term investments
k. Paid $30,000 in salaries
l. Accrued additional $15,000 in taxes