Question

Exercise 3-6A Identifying transaction type, its effect 011 the accounting equation, and whether
the effect is recorded with a debit or credit

Required
Id ent ify whether each of the follow ing tra nsactio ns is an asse t so urce (AS). asset
use (AU) , asset exchange (A E), or claims exchange (C E). Also e xplai n how each event
afTects th e acco untin g eq uatio n by placing a + for increase, - for decrease. a nd NA for
1101 affec1ed under each of the co mpo nent s of the acco unt in g eq uatio n. Fina lly, in
dicate whet her the efTec t req uires a debit or cred it ent ry. The first event is reco rded as
an examp le.

Stockholders Equity

Event

a

Type of
Event
AS

Assets
+ Debit

Liabilities +
NA

Common Stock
NA

Retained
+ Earnings
+ Credit

a. P rov id ed se rvices on acco un t.
b. Rece ived cash in payment of accounts receivable.
c. Pur c hased la nd by paying cas h.
d. Recognized revenue for services co mple ted: cash collected previo usly.
e. Paid a cash dividend to t he stock holde rs.
f. Paid cash in ad vance for o ne year's rent.
g. Received cash for services lo be performed in the future.
h. 1ncurred other o perat in g expenses o n acco unt.
i. Paid sala rie s pa yable.
j. Recognized expense for prepaid rent that had been used up by the end of th e accounting
period.
k. Provided service s for cas h.
I. P urchased supplie s on accoun t..
m. Recognized expense for supplies used d ur ing the period.
n. Recog nized accrued int erest revenue.

Answer 1

Answer-

Event.	Type of Event	Assets	=	Liabilities		Stockholders’ Equity
					+	Common		Retained
						Stock		Earnings
a.	AS	+Debit	=	NA	+	NA	+	+Credit AQ
b.	AE	+Debit -credit	=	NA	+	NA	+	NA
c.	AE	+Debit -Credit	=	NA	+	NA	+	NA
d.	CE	NA	=	-Debit	+	NA	+	+Credit
e.	AU	-Credit	=	NA	+	NA	+	-Debit
f.	AE	+Debit -Credit	=	NA	+	NA	+	NA
g.	AS	+ Debit	=	+Credit	+	NA	+	NA
h.	CE	NA	=	+Credit	+	NA	+	-Debit
i.	AU	-Credit	=	-Debit	+	NA	+	NA
j.	AU	-Debit	=	NA	+	NA	+	-Debit
k.	AS	+Debit	=	NA	+	NA	+	+Credit
l.	AS	+Debit	=	+Credit	+	NA	+	NA
m.	AU	-Credit	=	NA	+	NA	+	-Debit
n.	AS	+Debit	=	NA	+	NA	+	+Credit