The Analytical Framework Used to Evaluate Transactions Is Reproduced Below

question 80

Essay

The analytical framework used to evaluate transactions is reproduced below:

Using this analytical framework indicate the effect of each of the following transactions for Wisco Corporation:
1.Wisco sold merchandise for $225,000 on account which cost $170,000 to manufacture.
2.Wisco purchased for cash $110,000 of raw material inventory.
3.The company paid $25,000 in advance for an advertising campaign that would be aired next year.
4.Wisco paid its employees $15,000 for the month.
5.The company purchased $7,000 of supplies on account.
6.Wisco issued $25,000 of long-term debt.
7.The company used $10,000 of excess cash to purchase marketable securities.
8.Wisco purchased a machine for $22,000 in cash.
9.At the end of the year Wisco paid dividends of $5,000.
10.At the end of the year the marketable securities that Wisco purchased in transaction 7 were now worth $11,500.
11.Depreciation for the period was $1,500.

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Definitions:

Credit

The trust which allows one party to provide resources to another party wherein the second party does not reimburse the first party immediately but promises to do so in the future.

Bonds

Fixed income investments representing a loan made by an investor to a borrower, typically corporate or governmental.

Loan Money

The act of giving money, property, or other material goods to another party in exchange for future repayment of the principal amount, along with interest or other finance charges.

Lottery

A form of gambling involving the drawing of numbers for a prize.