Question

Exercise 156 Analyze the following transactions in terms of their effect on the basic accounting equation. (1) Issued stock to investors for $20,000 in cash. (2) Purchased supplies on credit for $700. (3) Billed customers $1,000 for services provided. (4) Paid for supplies purchased in transaction 2. (5) Paid dividends of $300 cash to stockholders. (6) Received half of amount due from customers billed in transaction 3. (7) Received and paid utility bill for $100. Record each transaction by increasing (+) or decreasing (-) the dollar amount of each item affected. Indicate the new balance of each item after a transaction is recorded. (If balance after calculations is o then please enter o for that field and all successive fields for Balance for the respective column.) Transaction Cash + Accounts Receivable + Supplies - Accounts Payable + Common Stock + Retained Earnings 20000 Balance 20000 UU

Answer 1

(2) (3) Assets Liabilties Equity Transaction Cash Accounts Receivable Supplies = Accounts Payable + Common Stock + Retained Earnings Retained Earnings titles (1) 20,000 20,000 + 700 = 700 + Balance 20,000 700 = 700 + 20,000 + 1,000 1,000 Service Revenue Balance 20,000 1,000 700 700 + 20,000 + 1,000 (4) (700) (700) + Balance 19,300 1,000 700 20,000 + 1,000 (300) (300) Dividends Balance 19,000 1,000 700 20,000 + 700 (500) Balance 19,500 500 700 = 20,000 + 700 (7) (100) (100) Utility expense Totals 19,400 500 700 = 20,000 + 600 + (5) + + (6) 500 + + + +

Answer 2

Record each transaction by increasing (+) or decreasing (–) the dollar amount of each item affected