Determining Financial Statement Effects of Various Transactions L04
The following transactions occurred during a recent year:
a. Issued stock to organizers for cash (example).
b. Purchased equipment on credit.
c. Borrowed cash from local bank.
d. Earned revenue, collected cash.
e. Incurred expenses, on credit.
f. Earned revenue, on credit.
g. Paid cash on account.
h. Incurred expenses; paid cash.
i. Earned revenue; collected three-fourths in cash, balance on credit.
j. Declared and paid cash dividends.
k. Collected cash from customers on account.
l. Experienced theft (a loss) of $100 cash.
m. Incurred expenses; paid four-fifths in cash, balance on credit.
n. Paid income tax expense for the period.
Required:
For each of the transactions, complete the tabulation, indicating the effect ( + for increase and − for decrease) of each transaction. (Remember that A = L + SE, R − E = NI, and NI affects SE through Retained Earnings.) Write NE if there is no effect. The first transaction is provided as an example.
| BALANCE SHEET | INCOME STATEMENT | ||||
Transaction | Assets | Liabilities | Stockholder’s Equity | Revenues | Expenses | Net Income |
(a) (example) | + | NE | + | NE | NE | NE |
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