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Jack Hammer Company completed the following transactions. The annual accounting period ends December 31. Apr. 30 Received $900,000 from Commerce Bank after signing a 12-month,

Jack Hammer Company completed the following transactions. The annual accounting period ends December 31.

Apr. 30 Received $900,000 from Commerce Bank after signing a 12-month, 6.00 percent, promissory note.
June 6 Purchased merchandise on account at a cost of $100,000. (Assume a perpetual inventory system.)
July 15 Paid for the June 6 purchase.
Aug. 31 Signed a contract to provide security service to a small apartment complex starting in September, and collected six months fees in advance, amounting to $36,500.
Dec. 31 Determined salary and wages of $65,000 were earned but not yet paid as of December 31 (ignore payroll taxes).
Dec. 31 Adjusted the accounts at year-end, relating to interest.
Dec. 31 Adjusted the accounts at year-end, relating to security service.

Required:

  1. For each listed transaction and related adjusting entry, indicate the accounts, amounts, and effects on the accounting equation.
  2. For each item, indicate whether the debt-to-assets ratio is increased or decreased or there is no change. (Assume Jack Hammers debt-to-assets ratio is less than 1.0.)

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Date Assets Assets Liabilities + Stockholders' Equity Apr. 30 June 6 July 15 Aug. 31 Dec. 31 Dec. 31 Dec. 31 Effect on Ratio Numerator Denominator Date Apr. 30 June 6 July 15 Aug. 31 Dec. 31 Dec. 31 Dec. 31

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