Question

Exercise 156 Analyze the following transactions in terms of the 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 then please enter for that field and all successive fields for Balance for the respective column)

Answer 1

Answer:

Transaction	Cash	+	Accounts receivable	+	Supplies	=	Accounts payable	+	Common stock	+	Retained earnings
(1)	+$20,000								+$20,000
Balance	$20,000		$0		$0		$0		$20,000		$0
(2)					+$700		+$700
Balance	$20,000		$0		$700		$700		$20,000		$0
(3)			+$1,000								+$1,000
Balance	$20,000		$1,000		$700		$700		$20,000		$1,000
(4)	-$700						-$700
Balance	$19,300		$1,000		$700		$0		$20,000		$1,000
(5)	-$300										-$300
Balance	$19,000		$1,000		$700		$0		$20,000		$700
(6)	+$500		-$500
Balance	$19,500		$500		$700		$0		$20,000		$700
(7)	-$100										-$100
Balance	$19,400		$500		$700		$0		$20,000		$600