Question

EXERCISE 1-13 The following selected transactions were completed by Salvo Delivery Service dur- ing February: Transactions Objective 7 1. Received cash from owner as additional investment, $35,000 2. Received cash for providing delivery services, $15,000 3. Paid creditors on account, $1,800 4. Billed customers for delivery services on account, $11,250 5. Paid advertising expense, $750. 6. Purchased supplies for cash, $800 7. Paid rent for February, $2,000 8. Received cash from customers on account, $6,740 9. Determined that the cost of supplies on hand was $135; therefore, $665 of sup- plies had been used during the month 10. Paid cash to owner for personal use, $1,000 C Indicate the effect of each transaction on the accounting equation by listing the numbers identifying the transactions, (1) through (10), in a vertical column, and in- serting at the right of each number the appropriate letter from the following list a. Increase in an asset, decrease in another asset b. Increase in an asset, increase in a liability c. Increase in an asset, increase in owner's equity d. Decrease in an asset, decrease in a liability e. Decrease in an asset, decrease in owner's equity

Answer 1

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Answers are standardized, no further explanation require: Solution: Explanation: Transaction Answer: Cash Increases and Onwer equity increases 1 C C or B It is not mentioned providing in future or already provided, 2 answer can be "B" Cash decreases and Liabilities decreases. 3 D AR increases and Sales increases the owner's equity. 4 C Cash will decrease and Adv exp will decrease the owner equity. Supplies increases and Cash decreases Cash will decrease and rent expense will decrease the owner equity Cash increases and Accounts receivable decreases 5 E 6 A E OW 8 Supplies decreases and Expense will decrease the owner's equity. E Cash decreases and Drawing decreases ownwer's equity. 10