Other things held constant, which of the following events is most likely to encourage a firm to increase the amount of debt in i
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Answer
The answer and procedures of the exercise are attached in the following archives.
Explanation
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Answer and Explanation:
The transactions 3 6 and 8 represents that the expenses are incurred which results in increased and expenses and the transaction 4 and 5 shows that there is an increased in revenue
The journal entry is shown below:
For transaction 3
Rent expense
To Cash
(Being the rent expense is paid for cash is recorded)
As the expense has debit balance so it would be increased
For transaction 6
Electricity expenses Dr
To Cash
(Being the energy usage is paid for cash is recorded)
As the expense has debit balance so it would be increased
For transaction 8
Advertising expense Dr
To Account payable
(Being the advertising expense is recorded)
As the expense has debit balance so it would be increased
For transaction 4
Account receivable Dr
To Service revenue
(Being the service is provided)
As the revenue has credit balance so it would be increased
For transaction 5
Cash Dr
To Service revenue
(Being the service provided is recorded)
As the revenue has credit balance so it would be increased
The attachment is provided for better understanding
The other transactions represent the assets, liabilities and stockholder equity
