Bryanger Company sells a wide range of inventories that are initially purchased on account. Occasionally, a short-term
Question:
a. On January 10, 2014, purchased merchandise on credit for $18,000. The company uses a perpetual inventory system.
b. On March 1, 2014, borrowed $40,000 cash from City Bank and signed a promissory note with a face amount of $40,000, due at the end of six months, accruing interest at an annual rate of 8 percent, payable at maturity.
Required:
1. For each of the transactions, indicate the accounts, amounts, and effects (+ for increase, for decrease, and NE for no effect) on the accounting equation. Use the following structure:
2. What amount of cash is paid on the maturity date of the note?
3. Discuss the impact of each transaction on the quick ratio. (Assume Bryanger Company's quick ratio was 1.10 prior to each transaction.)
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
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Related Book For
Fundamentals of Financial Accounting
ISBN: 978-1259103292
4th Canadian edition
Authors: Fred Phillips, Robert Libby, Patricia Libby, Brandy Mackintosh
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