Answer:
Soundgarden Company
Journal Entries:
July 10, 2020:
Debit Cash Account (or Accounts Receivable) $800,000
Credit Sales Revenue $800,000
To record the sale of 200 copiers at $4,000 apiece.
July 10, 2020:
Debit Warranty Expense $66,000
Credit Warranty Liability $66,000
To record the estimated warranty maintenance on copiers sold.
December 31:
Debit Warranty Liability $17,000
Credit Inventory $17,000
To record actual warranty costs incurred.
Explanation:
Soundgarden should record these transactions according to the matching principle, whereby warranty expense is recognized in the period that matches the sale so that all expenses related to sales are recognized when the sales are recognized. This is achieved by creating a warranty liability account after the sales and recording a warranty expense as the debit entry. When actual warranty costs are incurred, the Soundgarden Company will debit the warranty liability and credit the inventory actual for the actual costs.
Answer:
$205,000
--
Stockholders' equity = ($300,000 - $180,000) + ($375,000 - $240,000) - $50,000.
Explanation:
SE = (Total Assets - Total Liabilities) + (Revenues - Expenses) - Dividends
Answer:
a. Current ratio
Explanation:
Current Ratio is the least likely to be affected
The Current Ratio is given as
Current Ratio = [ Current assets ] ÷ [ Current liabilities ]
Now,
Building a new plant is a fixed asset for the company.
Thus, It will add to the Fixed assets
Since,
The Formula for current ratio is independent of the fixed assets
Therefore,
It will be least affected.
While,
Debt to equity ratio = [ Debt ] ÷ [ Equity ]
Debt to asset ratio= [ Total Debt ] ÷ [ Total Assets ]
Net fixed assets to total assets = [ Net fixed assets ] ÷ [ Total assets ]
in all the above relations, fixed asset will change the value of the total assets.
Hence,
They all will be affected
