Question

After completing her first year of operations, Penny Cassidy used a number of ratios to evaluate the performance of Penny’s Pool Service & Supply, Inc. She was particularly interested in the effects of the following transactions from the last quarter a. Paid herself a dividend of $ 10,000 as the sole stockholder.
b. Recorded advance payments from customers of $2,000.
c. Paid the current month’s rent in cask $500.
d. Purchased a new truck for $14,000 and signed a note payable for the whole amount. The truck was not placed in service until January 2015.
e. Recorded depreciation expense on office equipment of $600.
f Accrued interest expense on the note payable to the bank was $400.


Required: 1. Complete the following table, indicating the effects of each transaction on each financial statement category listed. Indicate the amount and use + for increase, — for decrease, and NE for no effect.


2. Complete the following table, indicating the sign of the effects of each transaction on the financial ratio listed. Use + for increase. — for decrease, and NE for noeffect.


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  • CreatedJuly 01, 2014
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