Jack Hammer Company completed the following transactions The annual accounting
Jack Hammer Company completed the following transactions. The annual accounting period ends December 31.
Apr. 30 Received $ 600,000 from Commerce Bank after signing a 12-month, 6 percent, promissory note.
June 6 Purchased merchandise on account at a cost of $ 75,000. (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 and collected six months’ fees in advance amounting to $ 24,000. (Use an account called Unearned Revenue.)
Dec. 31 Determined salary and wages of $ 40,000 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 (+ for increase, – for decrease, and NE for no effect) on the accounting equation, using the following format:
2. For each item, state 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.)
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