determining and interpreting the effects of transactions on income statement categor 555504

Determining and Interpreting the Effects of Transactions on Income Statement Categories and Return on Assets – Creative Technology, a computer hardware company based in Singapore, developed the modern standard for computer sound cards in the early 1990s. Recently, Creative has released a line of portable audio products to directly compete with Apple’s popular iPod. Presented here is a recent income statement (dollars in millions).

Its beginning and ending assets were $393 and $409, respectively.

Required:

Listed here are hypothetical additional transactions. Assuming that they also occurred during the fiscal year, complete the following tabulation, indicating the sign of the effect of each additional transaction ( + for increase, – for decrease, and NE for no effect). Consider each item independently and ignore taxes.

a. Recorded sales on account of $500 and related cost of goods sold of $475.

b. Incurred additional research and development expense of $100, which was paid in cash.

c. Issued additional shares of common stock for $200 cash.

d. Declared and paid dividends of $90.