Exercises 1) Carefully analyze the following transactions and then indicate their effects on current ratio, debt ratio, net income, ROE and ROA. Use (+) to indicate an increase, (-) to indicate a decrease, and (0) to indicate either no effect or an indeterminate effect. Initial current ratio is greater than 1.0 (Suggestion: For every transaction prepare the journal entry first. Then show the effect on balance sheet. Try to determine the changes on current assets and liabilities, total liabilities, total assets and equity.) Current Debt # TRANSACTIONS Net Ratio Income ROA ROE Ratio 1 Company exchanged existing bonds with new Common Stock 2 Company issued new Common Stock in cash 3 Company sold inventory on credit 4 Company sold inventory in cash 5 Wages Payable is paid in cash 6 A long term assets is sold at a gain A long term assets is sold at a loss 7 8 Accounts payable is paid 9 Company paid out dividends 10 Cash is acquired through bonds 11 Cash is acquired through short term bank loans 12 Company purchased a one year insurance policy 13. Salaries are paid for month 14 Company purchased inventory in cash 15 Company purchased inventory on credit 16 Accounts receivable is collected 17 A long term asset is purchased in cash 18 A long term asset is purchased on mortgages Company received the telephone bill for month 19