Question

The following transaction has been recorded in a particular accounting period. Determine the effect of this transaction on the Accounting Equation Please note: do not overthink the scenario. Instead, deal only with the facts provided. The Accounting Equation effects being requested in any given scenario are for the current period only A business purchases Inventory for $5,000 cash. Increase in Asset Increase in the No Efecto Shareholders Equity Increase in increase in Libis Decrease in Shareholders Equity Increase in As DecreaseLabies Notect on Shareholders' Couty No Effect on Asset No Erectonites No Effect on Shareholders Equity O No Effect on increase in Liabilities Decrease in Shareholders' Equity Question 25 The following transaction has been recorded in a particular accounting period. Create a journal entry for this transaction. Please note: do not overthink the scenario. Instead, deal only with the facts provided. The journal entry effects being requested in any given scenario are for the current period only A business records depreciation of $1,500 for the accounting period. Debit to Depreciation Expense for $1.500; Credit to Accumulated Depreciation for $1.500 Debit to Accumulated Depreciation for $1500,Credit to Depreciation Expense for $1.500 O Debit to Depreciation Expers for $1.500 Credit to Cash for $1.500 O Debit to Depreciation Payable for $1.500Credit to Depreciation Expense for $1,500 Debetto Cash for $1.5oCredit to Accumulated Depreciation for $1.500

Answer 1

1. Answer: No Effect on Assets; No Effect on Liabilities; No Effect on Shareholders' Equity

Explanation:

If inventory purchased for $5,000 cash then Cash (asset) decreased by $5,000 and Inventory (Asset) increased by $5,000. So, Net effect is 0 (+$5,000-$5,000).

It does not affect liabilities and Stockholders' equity.

Hence, No effect on Assets, Liabilities and Stockholders' Equity

.

2. Answer: Debit to Depreciation Expense for $1,500; Credit to Accumulated Depreciation for $1,500

Explanation:

Entry for Depreciation:

Account title and Explanation	Debit	Credit
Depreciation expense	$1,500
Accumulated depreciation		$1,500
[To record depreciation expense]

Hence, Debit to Depreciation expense for $1,500 and Credit to Accumulated depreciation for $1,500.