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ack Hammer Company completed the following transactions. The annual accounting period ends December 31. Apr. 30 Received $660,000 from Commerce Bank after signing a 12-month,

ack Hammer Company completed the following transactions. The annual accounting period ends December 31.

Apr. 30 Received $660,000 from Commerce Bank after signing a 12-month, 8.50 percent, promissory note.
June 6 Purchased merchandise on account at a cost of $80,000. (Assume a perpetual inventory system.)
July 15 Paid for the June 6 purchase.
Aug. 31 Signed a contract to provide security service to a small apartment complex starting in September, and collected six months fees in advance, amounting to $26,500.
Dec. 31 Determined salary and wages of $45,000 were earned but not yet paid as of 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 security service.

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 Jack Hammers debt-to-assets ratio is less than 1.0.)

For each listed transaction and related adjusting entry, indicate the accounts, amounts, and effects on the accounting equation. (Do not round intermediate calculations. Round your answers to the nearest whole dollar. Enter any decreases to assets, liabilities, or stockholders equity with a minus sign. Enter your answers in transaction order provided in the problem statement.)

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Date Assets = Liabilities + Stockholders' Equity
Apr. 30 Cash 660,000 Notes Payable (short-term) 660,000
June 6 Inventories 80,000 Accounts Payable 80,000
July 15 Cash (80,000) Accounts Payable (80,000)
Aug. 31 Cash 26,500 Deferred Revenue 26,500
Dec. 31 Salaries and Wages Expense (45,000)
Dec. 31 Interest Expense Interest Expense
Dec. 31 Deferred Revenue Service Revenue

For each item, indicate whether the debt-to-assets ratio is increased or decreased or there is no change. (Assume Jack Hammers debt-to-assets ratio is less than 1.0.) (Enter your answers in transaction order provided in the problem statement.)

Date Effect on Ratio Numerator Denominator
Apr. 30
June 6
July 15
Aug. 31
Dec. 31
Dec. 31
Dec. 31

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