Question

Brief Exercise 2-4 Analyze the impact of transactions on the accounting equation (LO2-2) The following transactions occur for Badger Biking Company during the month of June: a. Provide services to customers on account for $47,000. b. Receive cash of $39,000 from customers in (a) above. c. Purchase bike equipment by signing a note with the bank for $32,000. d. Pay utilities of $4,700 for the current month. Analyze each transaction and indicate the amount of increases and decreases in the accounting equation. (Decreases to account classifications should be entered as a negative.) Transaction Assets = Liabilities + Stockholders' Equity $ (a) $ 0 $ 47,000 47,000 $ (b) increase $ 0 39,000 (b) decrease (c) $ $ 32,000 32,000 (d) $ 0

Answer 1

Dear Student,

The answer is provided in the given format in image, please refer the image.

Increase is represented as positive values and decrease is represented as negative values. Negative values are shown in Brackets i.e ().

The net effect on Accounting equation for transaction (b) is nil as $ 39,000 - $ 39,000 = $ 0.

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Transaction Assets 11 Liabilities + (a) $ 47,000 $ (b) Increase $ 39,000 $ (b) Decrease $ (39,000) $ (c) $ 32,000 $ (d) $ (4,700) $ Shareholder's Equity $ 47,000 $ $ $ $ (4,700) 32,000