Question

CH Learning Objective 4 E1-28 Using the accounting equation to analyze business transactions The analysis of the first cight transactions of Advanced Accounting Service follows Dt: cnc cách transactan. ASSETS LIABILITIES + EQUITY Contributed Capital + Retained Earnings Cash + Accounts +Equipment Accounts + Common - Dividends + Service - Salaries Receivable Payable Stock Revenue Expense 1 +31,000 +31,000 +3800 +3,800 Bal. $31,000+ $3,800 $31,000 + 53,800 +13,400 Bal. 531,000 + 53,800 + $13,400 $13,400 + $31,000 + $3,800 4 + 190 -190 Bal, $31,190 + $3,610 + $13,400 $13.400 + $31,000 + 53,800 5 410 Bal. $30,780 + $3,610 + $13,810 $13,400 + 531,000 + 53,800 6 -3,000 -8.000 Bal $22,780 + $3,610 + $13,810 55.400 $31,000 + STROO 7 +790 +790 Bal. $23,570 + $3,610 + $13,810 $5,400 + $31,000 + 54.590 B -1,500 - 1,500 Bal. 522,070 + 33,610 + 513,810 35,400 + $31,000 + 34,590 - $1,500 +13.400

Answer 1

Solution

1)

Answer: Issuance of common stock to stockholders

Explanation: Cash debited (increased) by $31000 and Common Stock credited (increased) by $31000. It generally means that the company must have made any issue of stock to public or any other person in cash.

2)

Answer: Earned Revenue on Account

Explanation: Accounts Receivable has been debited (increased) by $3800 and Service Revenue credited (increased) by $3800. It generally means that the company has provided any service to any person on account.

3)

Answer: Purchased equipment on account

Explanation: Accounts Payable credited (increased) by $13400 and Equipment debited (increased) by $13400. It happens when equipment bought on account.

4)

Answer: Collected cash on account

Explanation: Cash debited (increased) by $190 and Accounts Receivable credited (decreased) by $190. That means cash recovery made from receivables.

5)

Answer: Cash purchase of equipment

Explanation: Cash credited (decreased) by $410 and Equipment debited (increased) by $410. That means equipment bought in cash.

6)

Answer: Paid cash on account

Explanation: Cash credited (decreased) by $8000 and Accounts Payable debited (decreased) by $8000. That means payable balances have been settled in cash.

7)

Answer: Earned revenue and received cash

Explanation: Cash debited (increased) by $790 and Service Revenue credited (increased) by $790. This generally happens when services have been provided in exchange of cash.

8)

Answer: Paid Cash for Salaries expenses

Explanation: Cash credited (decreased) by $1500 and Salaries expenses account has been debited in Profit and Loss Account by $1500. That means Salaries has been paid in cash.