For each transaction numbered 1 through 4 below, identify which effect (a through g) would most likely occur as a result of the transaction. You may use each letter more than once or not at all. ...

Effects

a.Increase in current ratio and earnings per share

b.Decreases current ratio; increases earnings per share

c.Increases current ratio; does NOT change earnings per share

d.Decrease in current ratio and earnings per share

e.Decreases current ratio; does NOT change earnings per share

f.Does not change the current ratio or earnings per share

g.Can’t determine the direction of changes in the current ratio

Effects

a.+ A and + L

b. + A and + SE (on income statement)

c. + A and + SE (comprehensive income component)

d. – A and – L

e. – A and – SE (on income statement)

f. – A and – SE (comprehensive income component)

g. No change in total A, L, or SE

1.

Trading equity securities are purchased for $900 cash.

2.

Trading securities with a cost of $600 have a market value of $350 when the financial statements are produced.

3.

Trading securities with a cost of $12,000 have a market value of $14,000 when the financial statements are produced.

4.

Trading securities with an original cost of $3,000 and a balance sheet value of $700 are sold for $800.

5.

Trading securities with an original cost of $4,000 and a balance sheet value of $4,500 are sold for $4,300.

6.

Trading securities with an original cost of $9,000 and a balance sheet value of $7,800 are sold for $7,800.

7.

Trading securities with an original cost of $4,000 and a balance sheet value of $4,500 are sold for $4,600.

8.

Available-for-sale securities with a cost of $7,000 have a market value of $5,200 when the financial statements are produced.

9.

Available-for-sale securities with a cost of $7,000 have a market value of $7,200 when the financial statements are produced.