Indicate How Each Event Affects the Elements of Financial Statements $$\text { Increase } = \mathrm { I } \quad \text { Decrease } = \mathrm { D } \quad \text { No Effect } = \mathrm { N }$$

question 78

Short Answer

Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. You do not need to enter amounts. Assume use of a perpetual inventory system. $$\text { Increase } = \mathrm { I } \quad \text { Decrease } = \mathrm { D } \quad \text { No Effect } = \mathrm { N }$$
Ransom Co. sold merchandise to a customer for $1,000 on account. Ransom's cost of the merchandise was $800. Show how the transaction would affect Ransom's financial statements. $\begin{array} {| l| l| l| l| l| l| l| }\text { Assets}&\text { Liabilities }&\text {Equity}&\text { Revenues}&\text { Expenses }&\text { Net Income }&\text { Cash }\\\hline &&&&&\end{array}$

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Definitions:

Premium on Bonds Payable

The amount by which a bond's sale price exceeds its face value, reflecting additional value due to market conditions or the bond's terms.

Straight-Line Method

A depreciation method that allocates an equal portion of the initial cost of an asset to each period of its useful life.

Premium on Bonds Payable

The amount by which a bond's selling price exceeds its face value or par value, often resulting from interest rates lower than the bond's coupon rate.

Bonds Payable

Long-term liabilities representing money owed by an entity to bondholders, to be repaid at a specific future date.