The financial statements of Tootsie Roll in Appendix A at the back of this book contain the following selected accounts, all in thousands of dollars.
Common Stock ……………………..……………………..$ 24,586
Accounts Payable …………………..……………………… 11,572
Accounts Receivable ……………………………………… 32,371
Selling, Marketing, and Administrative Expenses ………… 97,821
Prepaid Expenses ………………………………………….. 6,551
Property, Plant, and Equipment …………………………… 201,401
Net Sales …………………………………………………… 492,742
Instructions
(a) What is the increase and decrease side for each account? What is the normal balance for each account?
(b) Identify the probable other account in the transaction and the effect on that account when:
(1) Accounts Receivable is decreased.
(2) Accounts Payable is decreased.
(3) Prepaid Expenses is increased.
(c) Identify the other account(s) that ordinarily would be involved when:
(1) Interest Expense is increased.
(2) Property, Plant, and Equipment is increased.