3.Select the letter of the effect on the ratios (a
through
c) as a result of each transaction listed in items 1 through 16.
Effects
|
a.
|
Increase in debt/equity ratio
|
b.
|
Decrease in debt/equity ratio
|
c.
|
Does not change debt/equity ratio
|
|
|
____1.Purchased supplies on account to be used next month.
____2.Paid accounts payable.
____3.Issued a $1,000 short-term note payable for $970.
____4.Amortized the discount of the short-term note payable.
____5.A portion of long-term debt is due next year.
____6.Declared cash dividends to holders of stock.
____7.Paid the cash dividend previously declared.
____8.Received money from customer prior to delivery of the product to the customer.
____9.Delivered product to a customer who previously paid for that product.
____10.Collected sales tax on behalf of the state government.
____11.Accrued payroll taxes the firm has to pay to the federal government within three months.
____12.Paid a bonus (not previously accrued) amounting to 5% on reported income to the CEO for the current year.
____13.A large payment is remotely probable resulting from a lawsuit filed against the firm.
____14.A large payment is reasonably probable resulting from a lawsuit filed against the firm.
____15.A $10,000 payment is highly probable resulting from a lawsuit filed against the firm.
____16.Bondholder converted bond into stock through conversion feature.