PA10-1 (Algo) Determining Financial Effects of Transactions Affecting Current Liabilities with Evaluation of Effects on the Debt-to-Assets Ratio (LO 10-2, LO 10-5) Jack Hammer Company completed the following transactions. The annual accounting period ends December 31. April 30 Received $780,000 from Commerce Bank after signing a 12-month, 9.00 percent, promissory note. June 6 Purchased merchandise on account at a cost of $90,000. (Assume a perpetual inventory system.) July 15 Paid for the June 6 purchase. August 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 $31,500. December 31 Determined salary and wages of $55,000 were earned but not yet paid as of December 31 (ignore payroll taxes). December 31 Adjusted the accounts at year-end, relating to interest. December 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 Hammer's debt-to-assets ratio is less than 1.0.) Complete this question by entering your answers in the tabs below. Required Required 1 2 For each listed transaction and related adjusting entry, indicate the accounts, amounts, and effects on the accounting equation. (Do not round intermediate calculations. answers to the nearest whole dollar. Enter any decreases to assets, liabilities, or stockholders equity with a minus sign. Enter your answers in transaction order provided problem statement.) S Assets Stockholders' Equity Cash Inventory Cash Cash Date April 30 June 6 July 15 August 31 December 31 December 31 December 31 Liabilities 780,000 Notes Payable short-term) 90,000 = Accounts Payable (90,000) = Accounts Payable 31,500 = = Salaries and Wages Payable + 780,000 + 90,000+ (90,000) + 31,500 + 55,000 + Salaries and Wages Expense (55,000) = Interest Payable 46,800 + Interest Expense (46,800) ( + Service Revenue Required 1 Required 2 > Required Required 1 2 For each item, indicate whether the debt-to-assets ratio is increased or decreased or there is no change. (Assume Jack Hammer's debt-to-assets ratio is less than 1.0.) (Enter your answers in transaction order nra.. Llam statement.) Date Effect on Ra Numerator Denominator April 30 Increased June 6 Increased July 15 Decreased August 31 Increased December 31 Increased December 31 fincreased December 31 Decreased