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Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac
Edition 26ISBN: 978-1337498159Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac
Edition 26ISBN: 978-1337498159 Exercise 2
A Transactions
Arrowhead Delivery Service is owned and operated by Gates Deeter. The following selected transactions were completed by Arrowhead Delivery Service during August:
1. Received cash from owner as additional investment, $25,000.
2. Paid creditors on account, $3,750.
3. Billed customers for delivery services on account, $22,400.
4. Received cash from customers on account, $11,300.
5. Paid cash to owner for personal use, $6,000.
Indicate the effect of each transaction on the accounting equation elements (Assets, Liabilities, Owner's Equity, Drawing, Revenue, and Expense). Also indicate the specific item within the accounting equation element that is affected. To illustrate, the answer to (1) follows:
(1) Asset (Cash) increases by $25,000; Owner's Equity (Gates Deeter, Capital) increases by $25,000.
B Transactions
Interstate Delivery Service is owned and operated by Katie Wyer. The following selected transactions were completed by Interstate Delivery Service during May:
1. Received cash from owner as additional investment, $18,000.
2. Paid advertising expense, $4,850.
3. Purchased supplies on account, $2,100.
4. Billed customers for delivery services on account, $14,700.
5. Received cash from customers on account, $8,200.
Indicate the effect of each transaction on the accounting equation elements (Assets, Liabilities, Owner's Equity, Drawing, Revenue, and Expense). Also indicate the specific item within the accounting equation element that is affected. To illustrate, the answer to (1) follows:
(1) Asset (Cash) increases by $18,000; Owner's Equity (Katie Wyer, Capital) increases by $18,000.
Arrowhead Delivery Service is owned and operated by Gates Deeter. The following selected transactions were completed by Arrowhead Delivery Service during August:
1. Received cash from owner as additional investment, $25,000.
2. Paid creditors on account, $3,750.
3. Billed customers for delivery services on account, $22,400.
4. Received cash from customers on account, $11,300.
5. Paid cash to owner for personal use, $6,000.
Indicate the effect of each transaction on the accounting equation elements (Assets, Liabilities, Owner's Equity, Drawing, Revenue, and Expense). Also indicate the specific item within the accounting equation element that is affected. To illustrate, the answer to (1) follows:
(1) Asset (Cash) increases by $25,000; Owner's Equity (Gates Deeter, Capital) increases by $25,000.
B Transactions
Interstate Delivery Service is owned and operated by Katie Wyer. The following selected transactions were completed by Interstate Delivery Service during May:
1. Received cash from owner as additional investment, $18,000.
2. Paid advertising expense, $4,850.
3. Purchased supplies on account, $2,100.
4. Billed customers for delivery services on account, $14,700.
5. Received cash from customers on account, $8,200.
Indicate the effect of each transaction on the accounting equation elements (Assets, Liabilities, Owner's Equity, Drawing, Revenue, and Expense). Also indicate the specific item within the accounting equation element that is affected. To illustrate, the answer to (1) follows:
(1) Asset (Cash) increases by $18,000; Owner's Equity (Katie Wyer, Capital) increases by $18,000.
Explanation
Verified
Verified
(3A) 1. Received cash from owner as additional investment $25,000 -: Assets (Cash) increases by $25,000; Owner's equity (Gates Deeter, capital), increases by $25,000.
2. Paid creditors on account $3,750 -: Assets (Cash) decreases by $3,750; Liability (Accounts payable) decreases by $3,750.
3. Billed customers for delivery services on account $22,400 -: Asset (Account receivable) increases by $22,400; Revenue (Delivery service fees) increases by $22,400.
4. Received cash from customers on account, $11,300 -: Asset (Cash) increases by $11,300; Asset (Account receivable) decreases by $11,300.
5. Paid cash to owner for personal use, $6,000 -: Asset (Cash) decreases by $6,000; Drawing (Gates Deeter) increases by $6,000.
(3B) 1. Received cash from owner as additional investment $18,000 -: Assets (Cash) increases by $18,000; Owner's equity (Katie Wyer, capital), increases by $18,000.
2. Paid advertisement expense $4,850 -: Assets (Cash) decreases by $4,850; Liability (Advertisement expense) decreases by $4,850.
3. Purchased supplies on account, $2,100-: Liability (Account payable) increases by $2,100; Assets (Supplies) increases by $2,100.
4. Billed customers for delivery services on account, $14,700 -: Asset (account Receivable) increases by $14,700; Revenue (Delivery Service fees) increases by $14,700.
5. Received cash from customers on account $8,200 -: Asset (cash) increases by $8,200; Asset (Account Receivable) decreases by $8,200.
2. Paid creditors on account $3,750 -: Assets (Cash) decreases by $3,750; Liability (Accounts payable) decreases by $3,750.
3. Billed customers for delivery services on account $22,400 -: Asset (Account receivable) increases by $22,400; Revenue (Delivery service fees) increases by $22,400.
4. Received cash from customers on account, $11,300 -: Asset (Cash) increases by $11,300; Asset (Account receivable) decreases by $11,300.
5. Paid cash to owner for personal use, $6,000 -: Asset (Cash) decreases by $6,000; Drawing (Gates Deeter) increases by $6,000.
(3B) 1. Received cash from owner as additional investment $18,000 -: Assets (Cash) increases by $18,000; Owner's equity (Katie Wyer, capital), increases by $18,000.
2. Paid advertisement expense $4,850 -: Assets (Cash) decreases by $4,850; Liability (Advertisement expense) decreases by $4,850.
3. Purchased supplies on account, $2,100-: Liability (Account payable) increases by $2,100; Assets (Supplies) increases by $2,100.
4. Billed customers for delivery services on account, $14,700 -: Asset (account Receivable) increases by $14,700; Revenue (Delivery Service fees) increases by $14,700.
5. Received cash from customers on account $8,200 -: Asset (cash) increases by $8,200; Asset (Account Receivable) decreases by $8,200.
Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac
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