Identify which accounting effect (a
through
e)occurs as a result of each transactionnumbered 1 through 6. You may use each letter more than once or not at all.
Accounting Effects
|
a.
|
+ A and + L
|
b.
|
+ A and + SE
|
c.
|
– A and – L
|
d.
|
– A and – SE
|
e.
|
No change in total A, L, SE
|
|
|
____1.Acquired the use of equipment under a capital lease
____2.Paid the interest portion of the payment on a capital lease
____3.Paid the principal portion of the payment on a capital lease
____4.Depreciation of equipment leased under a capital lease
____5.Acquired the use of equipment under an operating lease
____6.Payment required on an operating lease
6.Identify the effect(s) on the debt/equity ratio (a
through
c)as a result of each transactionnumbered 1 through 6 below. You may use each letter more than once or not at all.
Effects
|
a.Increase in debt/equity ratio
|
b.Decrease in debt/equity ratio
|
c.Does not change debt/equity ratio
|
____1.Issued a bond payable at a discount
____2.Issued a non-interest-bearing note at a discount
____3.Issued an interest-bearing note at a premium
____4.Amortized discount to interest expense
____5.Paid interest on bonds payable that was issued at par
____6.Market value of bonds payable increased after issue date
____7. Retired a bond issue by paying cash