Atlanta Aeronautics Co.'s Pretransaction Statement of Financial Condition Accounts payable $20,000 Wages payable 20,000 Taxes payable Notes payable Total current abilities Long-term debt Total liabilities Common stock Capital paid in excess of par Retained earnings Total equity Total debt and equity Marketable securities Accounts receivable Inventory Prepaid expenses Total current assets Gross plant and equipment Accumulated depreciation Net plant and equipment Total assets Less: Cost of goods sold Gross profit Less: Operating expenses Operating profit (EBIT) Less: Interest expense Earnings before taxes (EBT) Less: Tax expense Net income Business Transaction 1 $15,000 10,000 470,000 500,000 5,000 1,000,000 *Cost of goods sold equals 40% sales. 1,500,000 500,000 1,000,000 Atlanta Aeronautics Co.'s Pretransaction Statement of Financial Performance Sales $2,000,000 Cash Accounts receivable Sales Atlanta Aeronautics Co. (AAC) sells $165,000 of merchandise on credit, 10,000 50,000 100,000 500,000 *Interest expense equals 6% of the combined notes payable and long-term debt balances. "The average federal and state tax rate is 35%. Indicate if any of the listed financial statement accounts is affected by the following business transactions and whether the listed ratios will increase, decrease, or remain unchanged as a result of the transaction. (Hint: Assume that the business transaction occurs exactly as stated without interpreting it further. Do not consider any related transactions that may occur before or after the specified transaction. Assume there are 365 days in a year.) 600,000 150,000 350,000 900,000 1,400,000 $2,000,000 DO $5,000,000 2,000,000 3,000,000 600,000 2,400,000 Financial Account Check if the Account Is Affected by the Specified Transaction Inventory D Accounts payable 33,000 2,367,000 828,450 $1,538,550

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