Question

Use the following to answer questions 6-8 Analyze each transaction. Under each category in the accounting equation, indicate whether the transaction: A. increases, B. decreases, or C. has no effect. The item (a) is provided as an example. (a) Provided services to a customer on account. (Revenue increases causing Stockholders' Equity to increase, Assets increase, and no effect on Liabilities). 6. Issued stock to owners. 7. Recorded and paid employees their salaries for the month. 8. Purchased a new office building using a long term note. Asset Liability Stockholders' Equity А Тc TA (a) 6. 8.

Answer 1

Answer 5² Impact on Ligbility Stockholler's Equity Asset . Increase I No Effect. Increase Transaction Journal Entry Explanation ash Al Issued stuch to - Dr. company has issued stock in 1 To Common Stock Ale exchange Owners. of Gsh which increques (Being stuck issyes) the asset balance. Also common Stock Balance in Stockholder's tyrity increases as oweniers has invested. Company will first record Recorded and paid 9 salary Ale – Salaries salary as the then company prys to employees To salaojies pagable for the monti the same (Being sal arjes payable) - Salary is expense and charged Salaries Payable Ale - on against the income of company To cash Ale which secreq jet the stockholler's (Berng salauly paid for the month equity of company. Overall Entry is 1. Also when company pays salary I there is an outflow of east from Salary Al - • To Cath Ale business which reduces the assets Being Salary pail) of the business. _ D Building Ak company prchased quset (building 8. | Purchased a new office I which inregves the goset bylegce. I building using a - To Notes Payable Ale company signed a note to purchase long term not (Being office builling prichased a building. Note Payable is a liability with a long term note which is increases yg company has signed Decrease | No Effect Decvense. Igcteque In wease I No Effect.