Question

Below are various transactions that a local corporation had occur during the month For each transaction, indicate the transaction's effect on the company's accounting equation by selecting either increase, decrease, or no effect for each area of the accounting equation. Do not leave any of the fields below blank. Note: If the transaction were to cause an increase and decrease to the same area of the accounting equation, 'no effect should be chosen as the overall effect to that area. A. Received $50,000 in cash from the sale of its common stock to stockholders. Borrowed $20,000 from the local bank by signing a note promising to pay back the $20,000 loan plus interest in two years. C. Paid $8,000 for the purchase of equipment. D. Provided services to customers for $5,000 on account. Received $5,000 from the customers in 'D' above. F Paid $1,200 for one year's worth of insurance in advance. G. Paid $800 to employees for salaries. H. Purchased supplies costing $1,400 on account. Assets Liabilities Stockholders' Equity Low 0

Answer 1

Event	Assets	Liability	Owners' Equity
a	Increase	No Effect	Increase
b	Increase	Increase	No Effect
c	No Effect	No Effect	No Effect
d	Increase	No Effect	Increase
e	No Effect	No Effect	No Effect
f	No Effect	No Effect	No Effect
g	Decrease	No Effect	Decrease
h	No Effect	No Effect	No Effect