Date
Assets
Liabilities
Equity
September 1
I
N
I
September 2
I,D
I
N
September 3
I,D
N
N
September 4
I
N
I
September 8
I,D
N
N
September 15
I
N
I
September 20
I,D
N
N
September 30
D
N
D
September 30
D
N
D
September 30
D
N
D
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: Medium
Learning Objective: 01-07 Analyze business transactions by applying the accounting equation.
Topic: 01-22 Transaction Analysis
225. For each of the following transactions, identify the effect on the accounting equation. Use "+" to indicate an increase and "-" to indicate a decrease. Use "A", "L", and "E" to indicate assets, liabilities, and equity, respectively.
(a)
R.H. Long invested $100,000 in a sole proprietorship.
+A
+E
(b)
$10,000 of services were rendered to customers on account.
_______
_______
(c)
Equipment was purchased for $50,000 on account.
_______
_______
(d)
A building was purchased for $100,000. $50,000 was paid in cash and the remainder was on account.
_______
_______
(e)
The rental premium for a 12-month policy was paid in cash in advance.
_______
_______
(f)
Paid the office secretary's salary.
_______
_______
(g)
The amount owed on the building was paid.
_______
_______
(a) +A +E
(b) +A +E
(c) +A, +L
(d) +A, -A, +L
(e) +A -A
(f) -A -E
(g) -A -L
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: Medium
Learning Objective: 01-07 Analyze business transactions by applying the accounting equation.
Topic: 01-22 Transaction Analysis
226. Bandu Company's accounts with the increases or decreases that occurred during this year are as follows:
Increase
Decrease
Cash
$6,000
Accounts receivable
$(2,000)
Supplies
15,000
Accounts payable
(8,000)
Notes payable
13,000
Except for Profit, an investment of $4,000, and a withdrawal of $12,000, no other items affected the capital account during the year. Using the balance sheet equation, calculate Profit for this year.
In order to maintain the balance sheet equation, Assets = Liabilities + Equity, Profit must be $22,000.
Assets = Liabilities + Equity
+19,000 + 5,000 + 14,000
Change in assets: 6,000 - 2,000 + 15,000 = 19,000 Change in liabilities: 13,000 - 8,000 = 5,000 Change in equity: 4,000 -12,000 + X = 14,000 X = 22,000
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: Hard
Learning Objective: 01-07 Analyze business transactions by applying the accounting equation.
Topic: 01-22 Transaction Analysis
227. Blu Disc paid its property owner $3,000 in cash for three months' rent in advance. Enter the appropriate amounts into the accounting equation format.
Assets = Liabilities + Equity
Cash + Prepaid Rent = Liabilities + Equity
-$3,000 + $3,000 = 0 + 0
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: Medium
Learning Objective: 01-07 Analyze business transactions by applying the accounting equation.
Topic: 01-22 Transaction Analysis
228. Describe source documents and their purpose.
Source documents are the business papers that identify and describe transactions and events. They are used to prevent errors, to verify transactions, and to serve as the basis for internal control. Source documents support the qualitative characteristic of verifiability and provide objective evidence of transactions. Examples of source documents include cheques, invoices, sales receipts, credit card statements, and bank statements.
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: Medium
Learning Objective: 01-07 Analyze business transactions by applying the accounting equation.
Topic: 01-22 Transaction Analysis
229. The bookkeeper of the Tide Company prepared a balance sheet immediately after each transaction was recorded. During September 2015, the first month of operation, the following balance sheets were prepared:
Tide Company
Balance Sheet