For Each Transaction Numbered 1 Through 5 Below, Identify Which

question 7

Essay

For each transaction numbered 1 through 5 below, identify which effect(s) (a through d) that each transaction would have on the current and debt/equity ratios. You may use each letter more than once or not at all. Some transactions have two answers.
____ 1. Equipment is purchased by incurring a long-term note payable and paying the balance in cash
____ 2. Paid for transportation of equipment shipped from a supplier
____ 3. Depreciated the equipment during the first year of use
____ 4. Paid for lubrication and periodic maintenance of the equipment
____ 5. Sold the equipment, receiving more money than its book value

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Definitions:

Notes Payable

Written promises to pay a specified sum of money, plus interest, by a certain date to the bearer or to a specified person.

Payee's View

The perspective or stance of the individual or entity receiving a payment or financial transaction.

Intermediate Calculations

Calculations performed as part of a larger problem-solving process that involve steps between the initial setup and the final solution.

2.5-Year Note

A promissory note or bond maturing in 2.5 years from the date it was issued.