Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 23

Evaluating the Impact of Typical Transactions
After finishing her first year of operations, Nicole used the debt-to-assets, asset turnover, and net profit margin ratios to determine how effective she was in running the business. Listed here are a few company transactions from the past quarter that may have influenced these ratios.
a. Customers used $200 of gift certificates to pay for spa services.
b. Acquired, on account, equipment costing $320.
c. Recorded spa treatment revenues of $1,500 on account.
d. Incurred advertising expense of $40, paid in cash.
e. Accrued $750 for utility bills.
f. Received $50,000 cash from an investor in exchange for company shares.
g. Received $2,500 cash by signing a short-term note payable.
h. Recorded $1,800 in depreciation expense.
Required:
1. Complete the following table, indicating the effects (account, amount, and direction) of each transaction. Use + for increase, for decrease, and NE for no effect.

2. Complete the following table, indicating the sign (+ for increase, for decrease, and NE for no effect) for each transaction. Assume that, prior to recording items ( a )-( h ), Nicole's Getaway Spa had more assets than liabilities, more revenues than net income, and more revenues than average assets.