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1 2 3 4 5 6 7 8 00 9 10 11 12 13 14 15 FAB Company sells a wide range of merchandise, which are initially purchased on account. Short-term notes are frequently issued to obtain cash. a) On January 10, FAB purchased $200 of merchandise on credit on a perpetual system. b) On March 1, FAB borrowed $600 by issuing a promissory note at face with 8 percent interest accrued at the beginning of each month until paid at maturity in six months. c) On April 1, FAB accrued interest on the $600 note. d) On September 1, FAB paid the note and accrued interest. REQUIRED: 1. On the spreadsheet below, record each event (a) to (d) above; name blank accounts. 2. As each event is recorded, indicate its effect on FAB's current ratio, debt-asset ratio, and times interest earned: Increase, Decrease, or No effect. FAB had $3000 liabilities and $5000 total assets prior to January 10. A B C D E F H J K (11 Event--FAB Co. Beginning Balanc a)buy merchandise b) receive on note c) accrue interest for March on Apr 1 d) pay note pay interest Ending BALANCE a) buy mdse on credit b) receive on note c) accrue March interest d) pay note pay interest SCF Class Cash Inven- tory 2500 2500 Curnt Debt Times Ratio Asst Interst ratio Earnd Comn Ret'd RE Stock Earn Clas 1000 1000 1000 1000 1000 D 1 2 3 4 5 6 7 8 00 9 10 11 12 13 14 15 FAB Company sells a wide range of merchandise, which are initially purchased on account. Short-term notes are frequently issued to obtain cash. a) On January 10, FAB purchased $200 of merchandise on credit on a perpetual system. b) On March 1, FAB borrowed $600 by issuing a promissory note at face with 8 percent interest accrued at the beginning of each month until paid at maturity in six months. c) On April 1, FAB accrued interest on the $600 note. d) On September 1, FAB paid the note and accrued interest. REQUIRED: 1. On the spreadsheet below, record each event (a) to (d) above; name blank accounts. 2. As each event is recorded, indicate its effect on FAB's current ratio, debt-asset ratio, and times interest earned: Increase, Decrease, or No effect. FAB had $3000 liabilities and $5000 total assets prior to January 10. A B C D E F H J K (11 Event--FAB Co. Beginning Balanc a)buy merchandise b) receive on note c) accrue interest for March on Apr 1 d) pay note pay interest Ending BALANCE a) buy mdse on credit b) receive on note c) accrue March interest d) pay note pay interest SCF Class Cash Inven- tory 2500 2500 Curnt Debt Times Ratio Asst Interst ratio Earnd Comn Ret'd RE Stock Earn Clas 1000 1000 1000 1000 1000 D
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Related Book For
Operations management processes and supply chain
ISBN: 978-0136065760
9th edition
Authors: Lee J Krajewski, Larry P Ritzman, Manoj K Malhotra
Posted Date:
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