Question

Cora Delivery Service during July Chapter 1 Introduction to Accounting and Business EX 1-12 Transactions The following selected transactions were completed by Cota Delivery Service 1. Received cash in exchange for common stock $35,000 2. Purchased supplies for cash, $1,100 3. Paid rent for October 54.500 4. Paid advertising expense, 5900. 5. Received cash for providing delivery services $33,000 6 Biled customers for delivery services on account $58.000 7. Paid creditors on account $2.900 & Received cash from customers on account $27.500. listing the numbers is right of each numbe Determined that the cost of supplies on hand was $300 and $8,000 of supplies had been used dur 10. Paid cash dividends. $2.500 Indicate the effect of each transaction on the accounting equation by listing the num tifying the transactions, (1) through (10), in a column, and inserting at the right of each the appropriate letter from the following list: Increase in an asset decrease in another asset. Increase in an asset, increase in a liability. Increase in an asset increase in stockholders' equity. d. Decrease in an asset decrease in a liability e Decrease in an asset decrease in stockholders' equity. 04 ✓d. $22,800 EX 1-13 Nature of transactions Teri West operates her own catering service. Summary financial data for July are presented in equation form as follows. Each line designated by a number indicates the effect of a transaction the equation. Nach increase and decrease in stockholders' equity, except transaction (5), affects tid income. Assets Stockholders' Equity Accounts Common Retained Fees Cash + Supplies + Land = Payable + Stock + Earnings - Dividends + Earned - Expenses Bal 40.000 3.000 82.000 7,500 50,000 67,500 1 +71.800 +71,800 2. -15,000 +15.000 3 -47.500 4 +1,100 +1,100 5 -5.000 6. -4,000 -4,000 -5,000 -1,500 Bal 40.300 2.600 50,000 67,500 4.600 -5,000 71.800 49.000 Describe each transaction b. What is the amount of the net increase in cash during the month? c. What is the amount of the net increase in stockholders' equity during the month d. What is the amount of the net income for the month? c. How much of the net income for the month was retained in the business! EX 1-14 Net income and dividends The income statement for the month of February indicate same period, $25,500 in cash dividends were paid. ruary indicates a net income of $17.500. Would it be correct to say that the business incurred a net loss of moth Discuss O! 7.500. During the of $8,000 during the

Answer 1

Ex 1-12

Transaction No	Answer	Explanation
1	c	Cash is an asset, common stock is part of equity
2	a	Supplies are asset too. One is increasing, one is decreasing
3	e	Rent is an expense which reduces the equity
4	e	Advertising is an expense which reduces the equity
5	c	Services are revenue that increase the equity
6	c	Services are revenue that increase the equity. On account means receivables will increase which are a part of assets
7	d	Creditors are liabilities. Paying them means decrease
8	a	Customers on account are asset.
9	e	Supplies expense would reduce equity as well as asset
10	e	Dividend would reduce the equity

Ex 1-13

a.

1	Provided catering service for cash, 71,800
2	Acquired land in exchange of cash for 15,000
3	Paid expenses 47,500
4	Purchased supplies on account 1,100
5	Paid cash dividends 5,000
6	Paid accounts payable 4,000
7	Supplies remaining on hand 2,600

b.

Net Increase in cash = 40,300 - 40,000 = 300

c.

Net Increase in equity = 71,800 - 49,000 - 5,000 = 17,800

d.

Net Income = 71,800 - 49,000 = 22,800

e.

Income retained is 22,800 - 5,000 = 17,800