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Indicate below the net effects that each of the ten independent transactions will have on the following three ratios. Use the expressions: increase, decrease, or
Indicate below the net effects that each of the ten independent transactions will have on the following three ratios. Use the expressions: increase, decrease, or no effect. 1. Earnings per share ([Net income - Preferred dividends] / Average number of outstanding shares) 2. Current ratio (Current assets/Current liabilities) 3. Debt to equity ratio (Total liabilities/Total equities - liabilities plus shareholders equity) You should record your response on the schedule provided below. State any assumptions you feel are necessary You are to assume that these are the respective ratios for this firm prior to each transaction: 1. EPS = $2 per share 2. CR-3 to 1 3. D to E-25% Transaction EPS D to E 1. Sold a service for cash [Select] Select] [Select] 2. Received cash payments from customers on previously recorded sales. Select) [Select) [Select] 3. Sold a service on account. Select) Select Select) Purchased inventory on an account Select Select Select Purchased equipment for cash. Select (Select) Select) 6. Paid cash to reduce the wages Select) [Select) Select) payable account. 7. Issued common stock for cash [Select] Select] Select) 8. Sold land for an amount greater than its cost. [Select) Select] [Select) 9. Made a cash interest payment Select) Select) Select] "Assume the journal entry made was: debit interest expense, credit cash 10. Paid off a long-term loan. Select
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