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PA$10-1($Algo$)$ Determining Financial Effects of Transactions Affecting Current Liabilities with Evaluation

of Effects on the Debt$-$to$-$Assets Ratio $[$LO $10-2,$ LO $10-5]$

Jack Hammer Company completed the following transactions. The annual accounting period ends December $31.$

April $30$ Received $$660,000$ from Commerce Bank after signing a $12-$month, $8\mathrm{.}50$ percent, promissory note.

June $6$ Purchased merchandise on account at a cost of $$80,000.($Assume a perpetual inventory system.$)$

July $15$ Paid for the June $6$ purchase.

August $31$ Signed a contract to provide security service to a small apartment complex starting in September, and

collected six months' fees in advance, amounting to $$26,500.$

December $31$ Determined salary and wages of $$45,000$ were earned but not yet paid as of December $31($ignore payroll

taxes$).$

December $31$ Adjusted the accounts at year$-$end, relating to interest.

December $31$ Adjusted the accounts at year$-$end, relating to security service.

Required:

For each listed transaction and related adjusting entry, indicate the accounts, amounts, and effects on the accounting equation.

For each item, indicate whether the debt$-$to$-$assets ratio is increased or decreased or there is no change. $($Assume Jack Hammer's

debt$-$to$-$assets ratio is less than $1\mathrm{.}0.)$

Complete this question by entering your answers in the tabs below.

Required $1$

liabilities, or stockholders equity with a minus sign. Enter your answers in transaction order provided in the problem statement.$)$

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