Question

Required: For each activity, indicate the impact on the accounting equation. After doing so for all transactions, ensure that the accounting equation remains in balance. The first item is provided as an example. (Decreases to account classifications should be entered as a negative.) Transaction Assets Liabilities + Stockholders' Equity $ 1,790 $ 1,790 $ 0 1. Provide services to customers on account, $1,790. 2. Pay $260 for current month's rent. 3. Hire a new employee, who will be paid $690 at the end of each month. 4. Pay $110 for advertising aired in the current period. 5. Purchase office supplies for $260 cash. 6. Receive cash of $1,190 from customers in (1) above. 7. Obtain a loan from the bank for $8,900. 8. Receive a bill of $410 for utility costs in the current period. 9. Issue common stock for $11,900 cash. 10. Pay $690 to employee in (3) above. Totals

Answer 1

Asset Liablities + Stockholders Equity Explanation $ $ 1,790 (260) $ $ $ $ $ $ $ S Revenue occurs and cash increases Expense occurs and cash decreases Hiring a employee is not a financial transaction Expense occurs and cash decreases Supplies increases and cash decreases thus amounting to 0 (110) 1 $ 1,790 2 $ (260) 3 $ 4 $ (110) 5 $ (260) $ 260 6 $ 1,190 $ (1,190) 7 $ 8,900 8 $ 9 $ 11,900 10 $ (690) $ S Cash increases and Account recievables decreases thus amounting to 0 S $ 8,900 $ 410 $ $ $ S (410) 11,900 (690) Cash increases and Loan increases Expense occurs and account payable increases Cash increases and common stock increases Expense occurs and cash decreases $ $ 21,530 $ 9,310 $ 12,220 $ 21,530 $ 21,530