Listed below are descriptions of six transactions, followed by a table listing six unique combinations of financial statement effects (I is for increase, D is for decrease, and NE is for no effect). In the blank space to the left of each transaction description, place the appropriate letter from the table that indicates the effects of that transaction on the various elements of the financial statements.
1. | —— Purchased machinery for $5,000. paying $1,000 cash and issuing a $4,000 note pay able for the balance. |
2. | —— Billed clients $16,000 on account. |
3. | —— Recorded a $500 maintenance expense of which $100 was paid in cash and the remaining amount was due in 30 days. |
4. | —— Paid an outstanding account payable of $400. |
5. | —— Recorded monthly utilities costs of $300. The entire amount is due in 20 days. |
6. | —— Declared a $40,000 dividend to be distributed in 60 days. |
Transaction | Revenue | Expenses | Assets | Liabilities | Owners' Equity |
a. | NE | NE | D | D | NE |
b. | NE | I | D | I | D |
c. | NE | NE | NE | I | D |
d. | NE | I | NE | I | D |
e. | NE | NE | I | I | N |
f. | I | NE | I | NE | I |
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