PA10 1 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 Apr 30 Received $672,000 from Commerce Bank after signing a 12 month, 9 00 percent, promissory note June 6 Purchased merchandise on account at a cost of $81,000 (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 $27,000 Dec 31 Determined salary and wages of $46,000 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 For each listed transaction and related adjusting entry, indicate the accounts, amounts, and effects on the accounting equation 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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PA10-1 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

PA10-1 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.

Apr.	30	Received $672,000 from Commerce Bank after signing a 12-month, 9.00 percent, promissory note.
June	6	Purchased merchandise on account at a cost of $81,000. (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 $27,000.
Dec.	31	Determined salary and wages of $46,000 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:

For each listed transaction and related adjusting entry, indicate the accounts, amounts, and effects on the accounting equation.
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.)