Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

After completing her first year of operations, Penny Cassidy used a number of ratios to eval performance of Penny's Pool Service&Supply, Inc. She was particularly

image text in transcribed
After completing her first year of operations, Penny Cassidy used a number of ratios to eval performance of Penny's Pool Service&Supply, Inc. She was particularly interested in the effects following transactions from the last quarter Evaluating the Impact of Transactions on Statement Categories and Ratios of the a. Paid herself a dividend of $10,000 as the sole stockholder. b. Recorded advance payments from customers of $2,000. c. Paid the current month's rent in cash, $500. d. Purchased a new truck for S14,000 and signed a note payable for the whole amount. The truck was not placed in service until January 2015. e. Recorded depreciation expense on office equipment of $600. f. Accrued interest expense on the note payable to the bank was $400. Required: Hint: Construct the journal entry for each transaction before evaluating its effect.) 1. Complete the following table, indicating the effects of each transaction on each financial statement category listed. Indicate the amount and use + for increase,--for decrease, and NE for no effect. Operating Income (Loss) Current Assets Transaction Gross Profit a. etc. 2. Complete the following table, indicating the sign of the effects of each transaction on the financial ratio listed. Use +for increase,- for decrease, and NE for no effect. Total Asset Turnover Transaction Net Profit Margin Return on Assets a. etc. Prennr

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions