Question

Determine which accounts increase and/or decrease for each of the transactions.

1B-6. (Similar to problem 1B-2) Show the effect on the accounting equation of the following events for the APRIL Company. Example: Investors purchased common stock in APRIL for $1,000 cash. Answer: Assets (cash) increased Owners' equity (common stock) increased APRIL borrowed $8,000 from the bank on a note. a. b. APRIL purchased a desk and two chairs for $1,500 cash. C. APRIL purchased supplies on account for $700. d. APRIL provided services to others for $7,200 cash e. APRIL provided services to others for $2,300 on account f. APRIL paid $280 cash for a newspaper ad. g. APRIL collected $600 of the money it was owed due to the services provided in e. h. APRIL paid off $300 of its supplies account created in c. i. APRIL paid its utility bill in the amount of $400 cash. j. k. APRIL paid a dividend to its investors in the amount of $500 cash. APRIL paid off half of its bank note from a. by giving the bank $4,000 of common stock.

Answer 1

Answer

• Note: “Increased/Decreased” is with respect to Assets, Liabilities & Equity [and not to be read in connection with the account name]
• Requirement

Transactions	ASSET		LIABILITIES		OWNER's EQUITY
a	Cash	Increased	Notes Payable	Increased
b	Cash	Decreased
	Fixed Assets	Increased
c	Supplies	Increased	Accounts Payable	Increased
d	Cash	Increased			Service Revenue	Increased
e	Accounts receivables	Increased			Service Revenue	Increased
f	Cash	Decreased			Advertising expense	Decreased
g	Cash	Increased
	Accounts receivables	Decreased
h	Cash	Decreased	Accounts Payable	Decreased
i	Cash	Decreased			Utilities expense	Decreased
j	Cash	Decreased			Dividends	Decreased
k			Notes Payable	Decreased	Common Stock	Increased