PB11-5 Journalizing Transactions, Evaluating Current Ratio Effects, and Reporting Liabilities (Comprehensive Problem) The Rosa Shell Tennis Center completed the following transactions in August 2009. (

a) On August 1, sold 12-month memberships and received $128,400, which included $8,400 in sales taxes required on taxable services. (

b) On August 1, purchased a new ball machine for $10,000, which was financed by signing a nine-month promissory note with interest payable at maturity on April 30, 2010, calculated using a 6 percent annual interest rate. (

c) Received a letter indicating that the center was being sued by a member for failing to display signs about wet court surfaces. The member was seeking $20,000 to cover medical expenses and mental hardship arising from a sprained ankle. The tennis center’s lawyer believes the pending lawsuit is without merit. (

d) Paid net wages of $11,000 to staff in the pro shop. Withheld but did not yet remit $1,450 for federal income tax, $630 for FICA taxes, and $40 for Salvation Army contributions. Employer payroll costs for FICA, state unemployment taxes ($594), and federal unemployment taxes ($88) have not yet been remitted. (

e) Made month-end adjustments for membership revenues earned and interest expense incurred. Required: 1. Prepare journal entries for each of the transactions and month-end adjustments. 2. Indicate the independent effect of each transaction or event on the current ratio (increase, decrease, no change). When determining the effects, assume the tennis center’s current ratio at the beginning of the period was 1.5 ( = $150,000 ÷ $100,000).