Atlanta Aeronautics Co.'s Pretransaction Statement of Financial Condition Cash $15,000 Accounts payable $20,000 Marketable securities 10,000. Wages payable 20,000 Accounts receivable 470,000 Taxes payable 10,000 Inventory 500,000 Notes payable 50,000 Prepaid expenses 5,000 Total current liabilities 100,000 Total current assets $1,000,000 Long-term debt 500,000 Total liabilities $600,000 Gross plant and equipment $1,500,000 Common stock $150,000 Accumulated depreciation Net plant and equipment 500,000 $1,000,000 Capital paid in excess of par 350,000 Retained earnings 900,000 Total equity $1,400,000 Total assets $2,000,000 Total debt and equity $2,000,000 Atlanta Aeronautics Co.'s Pretransaction Statement of Financial Performance Sales Less: Cost of goods sold Gross profit Less: Operating expenses Operating profit (EBIT) Less: Interest expense Earnings before taxes (EBT) Less: Taz expense Net income $5,000,000 2,000,000 $3,000,000 600,000 $2,400,000 33,000 $2,367,000 828,450 $1,538,550 Cost of goods sold equals 40% of sales. Interest expense equals 6% of the combined notes payable and long-term debt balances. 3The 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.) Business Transaction 1 Atlanta Aeronautics Co. (AAC) sells 25,000 shares of new common stock ($1 per share par value) to new and existing shareholders for $20 per share. Financial Account Check if the Account Is Affected by the Specified Transaction Cash Common stock Long-term debt Retained earnings Capital paid-in excess of part Operating income Financial Ratio Ratio's Behavior Debt ratio Basic earnings power Operating profit margin Fixed assets turnover Current ratio Business Transaction 2 Atlanta Aeronautics Co. (AAC)'s labor force goes on strike for two months, reducing the company's sales by 20.00%. Financial Account Cash Common stock Long-term debt Retained earnings Capital paid-in excess of par Operating income Check if the Account Is Affected by the Specified Transaction D Financial Ratio Ratio's Behavior Debt ratio Basic earnings power Operating profit margin Fixed assets turnover Current ratio Business Transaction 2 Atlanta Aeronautics Co. (AAC)'s labor force goes on strike for two months, reducing the company's sales by 20.00%. Financial Ratio Basic earning power Inventory turnover Average collection period Operating profit margin Debt ratio Ratio's Behavior