edumeister_logo

CHAPTER 1 ACCOUNTING IN ACTION SUMMARY OF QUESTIshowing page 35-36 out of 53

Upload your course documents to receive views for accessing documents on Edumeister.

Upload documents to earn views.
Accounting in Action
1 - 35
Ex. 186
Analyze the transactions of a business organized as a proprietorship described below and
indicate their effect on the basic accounting equation. Use a plus sign (+) to indicate an increase
and a minus sign (–) to indicate a decrease.
Assets
=
Liabilities
+
Owner's Equity
1. Received cash for services rendered.
_______
______
_______
2. Purchased office equipment on credit.
_______
______
_______
3. Paid employees' salaries.
_______
______
_______
4. Received cash from customer in payment
on account.
_______
______
_______
5. Paid telephone bill for the month.
_______
______
_______
6. Paid for office equipment purchased in
transaction 2.
_______
______
_______
7. Purchased office supplies on credit.
_______
______
_______
8. Owner withdrew cash for personal
expenses.
_______
______
_______
9. Obtained a loan from the bank.
_______
______
_______
10. Billed customers for services rendered.
_______
______
_______
Solution 186
(10 min.)
Assets
=
Liabilities
+
Owner's Equity
1. Received cash for services rendered.
+
+
2. Purchased office equipment on credit.
+
+
3. Paid employees' salaries.
4. Received cash from customer in payment
+,–
on account.
5. Paid telephone bill for the month.
6. Paid for office equipment purchased in
transaction 2.
7. Purchased office supplies on credit.
+
+
8. Owner withdrew cash for personal
expenses.
9. Obtained a loan from the bank.
+
+
10. Billed customers for services rendered.
+
+
Test Bank for Accounting Principles, Eighth Edition
1 - 36
Ex. 187
For each of the following, indicate whether the transaction increased (+), decreased (-), or had no
effect (NE) on assets, liabilities, and owner's equity using the following format.
Assets = Liabilities + Owner's Equity
1.
Made an investment to start the business.
2.
Billed customers for services performed.
3. Purchased equipment on account.
4.
Withdrew cash for personal use.
5.
Paid for equipment purchased in 3. above.
Solution 187
(5 min.)
Assets
=
Liabilities
+
Owner's Equity
1.
+
NE
+
2.
+
NE
+
3.
+
+
NE
4.
NE
5.
NE
Ex. 188
Ron Benes decides to open a cleaning and laundry service near the local college campus that will
operate as a sole proprietorship. Analyze the following transactions for the month of June in
terms of their effect on the basic accounting equation. 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. It is not necessary to identify the cause of changes in owner's
equity.
Transactions
(1)
Ron Benes invests $20,000 in cash to start a cleaning and laundry business on June 1.
(2)
Purchased laundry equipment for $5,000 paying $3,000 in cash and the remainder due in
30 days.
(3)
Purchased laundry supplies for $1,200 cash.
(4)
Received a bill from Campus News for $300 for advertising in the campus newspaper.
(5)
Cash receipts from customers for cleaning and laundry amounted to $1,500.
(6)
Paid salaries of $200 to student workers.
(7)
Billed the Tiger Football Team $200 for cleaning and laundry services.
(8)
Paid $300 to Campus News for advertising that was previously billed in Transaction 4.
(9)
Ron Benes withdrew $900 from the business for living expenses.
(10)
Incurred utility expenses for month on account, $400.

Upload your course documents to receive views for accessing documents on Edumeister.

Upload documents to earn views.