BSO, Inc., has assets of $600,000 and liabilities of $450,000, resulting in a debt-to-assets ratioof 0.75. For each of the following transactions, determine whether the debt-to-assets ratio willincrease, decrease, or remain the same. Each item is independent.a. Purchased $20,000 of new inventory on credit.b. Paid accounts payable in the amount of $50,000.c. Recorded accrued salaries in the amount of $100,000.d. Borrowed $250,000 from a local bank, to be repaid in 90 days.
BSO, Inc., has assets of $600,000 and liabilities of $450,000, resulting in a debt-to-assets ratioof 0.75. For each of the following transactions, determine whether the debt-to-assets ratio willincrease, decrease, or remain the same. Each item is independent.a. Purchased $20,000 of new inventory on credit.b. Paid accounts payable in the amount of $50,000.c. Recorded accrued salaries in the amount of $100,000.d. Borrowed $250,000 from a local bank, to be repaid in 90 days.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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BSO, Inc., has assets of $600,000 and liabilities of $450,000, resulting in a debt-to-assets ratio
of 0.75. For each of the following transactions, determine whether the debt-to-assets ratio will
increase, decrease, or remain the same. Each item is independent.
a. Purchased $20,000 of new inventory on credit.
b. Paid accounts payable in the amount of $50,000.
c. Recorded accrued salaries in the amount of $100,000.
d. Borrowed $250,000 from a local bank, to be repaid in 90 days.
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