P12-12A You are provided with the following transactions that took place during the year.
Current
Cash Cash
Free Debt Debt
Cash Coverage Coverage
Flow Ratio Ratio
Transactions ($125,000) (0.5 times) (0.3 times)
(a) Recorded credit sales $2,500.
(b) Collected $1,900 owed by customers.
(c) Paid amount owed to suppliers $2,750.
(d) Recorded sales returns of $500 and credited the customer’s account.
(e) Purchased new equipment $5,000; signed a long-term note payable for the cost of the equipment.
(f ) Purchased a patent and paid $65,000 cash for the asset.
Instructions
For each transaction listed above, indicate whether it will increase (I), decrease (D), or have
no effect (NE) on the ratios
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