Need help. Can steps be shown!

You've been asked to tutor Luis, a finance student who doesn't feel comfortable about his understanding of the relationship between a company's business activities, its financial accounts, and the company's financia ratios. To better appreciate these relationships, you've created the following exercises for Luis to complete. The purpose of these exercises is to help Luis (1) understand the effect of business transactions on financia statement such as balance sheet and income statement (2) these accounts and how changes in the numerators and denominators of financial ratios affect the ratios' values. However, before using these exercises in your tutoring session later today, you want to run the calculations on the following two business transactions, to ve fy the accuracy of your answers. To provide a consistent frame of reference for the company's financial statements and ratios, assume that the following balance sheet and income statement reflect the company's pretransaction condition and performance Lancashire Railway Co.'s Pretransaction Lancashire R Co.'s Pretransaction Statement of Financial Condition Statement of Financial Performance Cash $15,000 Accounts payable $20,000 $5,000,000 Sales Marketable securities 10,000 Wages payable Less: Cost of goods soldi 20,000 2,000,000 Accounts receivable 470,000 Taxes payable Gross profit 3,000,000 0,000 500,000 Notes payable 600,000 Inventory 50,000 Less: Operating expenses Prepaid expenses Total current liabilities 100,000 Operating profit (EBIT) 5,000 2,400,000 Total current assets 1,000,000 Long-term debt Less: Interest expense2 500,000 33,000 Total liabilities 600,000 Earnings before taxes (EBT) 2,367,000 Gross plant and equipment 500,000 Common stock Less: Tax expense 50,000 828,450 Accumulated depreciation Capital paid in excess of par 350,000 $1,538,550 500,000 Net income Net plant and equipment 1,000,000 Retained earnings 900,000 Total equity 400,000 icost of goods sold equals 40% of sales Total assets Total debt and equity $2,000,000 000,000 Interest expense equals 6% of the combined notes payable and long-term debt balances. 3The average federal and state tax rate is 35% Indicate if any of the listed financial statement accounts is affected by the following business transactions and whether the listed ratios wi ncrease Hint: Assume that the business transaction occurs exactly as stated without remain unchanged as a result of the transaction decrease, or further. Do not consider any related transactions that may occur before or after the specified transaction nterpreting it