Question

Analyzing Transactions Using the Financial Statement Effects Template
Following are selected transactions of Mogg Company. Record the effects of each using the financial statement effects template.

1. Shareholders contribute $10,000 cash to the business in exchange for common stock.
2. Employees earn $500 in wages that have not been paid at period-end.
3. Inventory of $3,000 is purchased on credit.
4. The inventory purchased in transaction 3 is sold for $4,500 on credit.
5. The company collected the $4,500 owed to it per transaction 4.
6. Equipment is purchased for $5,000 cash.
7. Depreciation of $1,000 is recorded on the equipment from transaction 6.
8. The Supplies account had a $3,800 balance at the beginning of this period; a physical count at period-end shows that $800 of supplies are still available. No supplies were purchased during this period.
9. The company paid $12,000 cash toward the principal on a note payable; also, $500 cash is paid to cover this note's interest expense for the period.
10. The company receives $8,000 cash in advance for services to be delivered next period.

Use negative signs with your answers, when appropriate.
Hint: For transaction 4, enter the net effect amount for balance sheet answers.

	Balance Sheet										Income Statement
Transaction	Cash Asset	+	Noncash Assets	=	Liabilities	+	Contributed Capital	+	Earned Capital		Revenue	-	Expenses	=	Net Income
1				=								-		=
2				=								-		=
3				=								-		=
4				=								-		=
5				=								-		=
6				=								-		=
7				=								-		=
8				=								-		=
9				=								-		=
10				=								-		=

Answer 1

Balance Sheet										Income Statement
Transaction	Cash	+	Noncash	=	Liabilities	+	Contributed	+	Earned		Revenue	-	Expenses	=	Net Income
	Asset		Assets				Capital		Capital
1	$ 10,000.00	+	$            -	=	$               -	+	$10,000.00	+	0		0	-	0	=	0
2	$               -	+	$            -	=	$       500.00	+	0	+	$   (500.00)		0	-	$   500.00	=	$   (500.00)
3	$               -	+	$ 3,000.00	=	$    3,000.00	+	0	+	0		0	-	0	=	0
4	$               -	+	$ 1,500.00	=	$               -	+	0	+	$ 1,500.00		$4,500.00	-	$3,000.00	=	$ 1,500.00
5	$    4,500.00	+	$(4,500.00)	=	$               -	+	0	+	0		0	-	0	=	0
6	$ (5,000.00)	+	$ 5,000.00	=	$               -	+	0	+	0		0	-	0	=	0
7	$               -	+	$(1,000.00)	=	$               -	+	0	+	$(1,000.00)		0	-	$1,000.00	=	$(1,000.00)
8	$               -	+	$(3,000.00)	=	$               -	+	0	+	$(3,000.00)		0	-	$3,000.00	=	$(3,000.00)
9	$(12,500.00)	+	$            -	=	$(12,000.00)	+	0	+	$   (500.00)		0	-	$   500.00	=	$   (500.00)
10	$    8,000.00	+	$            -	=	$    8,000.00	+	0	+	0		0	-	0	=	0