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Affects of Transactions on Financial Statements. See attached file for full problem description.
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The solution evaluates the impact of transactions on financial accounting.
Please see the attached file.
To: Jan Waters, Controller
From: [insert your name here]
Re: [insert the title of the assignment here]
Date: [insert the date here]
This is a two-part assignment. First, complete a set of tables (provided below) detailing Calliope's accounts. Then, write an e-mail to Jan Waters summarizing this information.
Use the tables below to display the requested information. The number of rows in each table is not indicative of the number of accounts affected. Add or remove rows as necessary.
Write a 500-word e-mail memo to Jan describing how Calliope's accounts and financial statements will be affected if the company decides to finance the expansion with either debt or equity options. Your memo should answer the following questions:
1. Discuss the effect of debt and equity transactions on the company accounts.
• Which accounts are affected by the issuance of a bond?
• Which accounts are affected by the issuance of stock for cash?
• Which accounts are affected by the payment of interest on a bond issuance?
• Which accounts are affected by the payment of cash dividends on stock?
2. Discuss the effect of debt and equity transactions on the company financial statements.
• How are the financial statements affected by the issuance of debt?
• How are the financial statements affected by the issuance of stock?
• How are the financials statements affected by payment of interest on a bond?
• How are the financial statements affected by the payment of a cash dividend on stock?
3. Would the company's debt-to-equity ratio increase or decrease if debt were issued? Would the ratio increase or decrease if stock were issued?
Which accounts are affected by the issuance of a bond? (Assume a bond premium.)
Account affected Increase or decrease?
Bonds Payable Increase
Bonds Premium Increase
How is the balance sheet affected when a company issues a bond? (Assume a bond ...
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