Jack Hammer Company completed the following transactions during 2013. The annual accounting period ends December 31, 2013.
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 Service 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 ( 1 for increase, 2 for decrease, and NE for no effect) on the accounting equation, using the following format:
Date Assets + Liabilities - Stockholders' Equity
2. For each item, state whether the quick ratio is increased, decreased, or there is no change.
(Assume Jack Hammer's quick ratio is greater than 1.0.)