contestada

Analyze the impact of transactions on the accounting equation (LO2-2)
Below are the external transactions for Shockers Incorporated.
1. Issue common stock in exchange for cash.
2. Purchase equipment by signing a note payable.
3. Provide services to customers on account.
4. Pay rent for the current month.
5. Pay insurance for the current month.
6. Collect cash from customers on account.
Assets = Liabillities + Stockholder's Equilty
1. Increase = No effect + Increase
2.
3.
4.
5.
6.
Required: Analyze each transaction. Under each category in the accounting equation, indicate whether the transaction increases, decreases, or has no effect. The first item is provided as an example.

Respuesta :

sadddamkashmiri801

Answer:

2. Increase = Increase + No effect

3. Increase = No effect + Increase

4. Decrease = No effect + Decrease

5. Decrease = No effect + Decrease

6. No effect = No effect + No effect

Explanation:

2. Purchase equipment by signing a note payable.

The double entry to record the purchase of equipment on credit will be as under:

Dr Equipment-Asset XX

Cr Note Payables-Liabilities         XX

Hence the Asset will increase and the liabilities will also increase

2. Increase = Increase + No effect

3. Provide services to customers on account.

The double entry to record the provision of services to customers on account will be as under:

Dr Accounts Receivables-Asset XX

Cr Revenue -Stockholder's Equilty          XX

Hence the Assets and Stockholder's Equilty of the company will be increased.

3. Increase = No effect + Increase

4. Pay rent for the current month.

The double entry would be:

Dr Rent Expense -Stockholder's Equilty          XX

Cr Cash account - Assets                                        XX

Both Assets account and Stockholder's Equilty will be decreased.

4. Decrease = No effect + Decrease

5. Pay insurance for the current month.

The double entry would be as under:

Dr Insurance Expense -Stockholder's Equilty XX

Cr Cash account - Assets                                        XX

Both Assets account and Stockholder's Equilty will be decreased.

5. Decrease = No effect + Decrease

6. Collect cash from customers on account.

The double entry would be as under:

Dr  Cash -Assets XX

Cr Accounts Receivables - Assets  XX

The net difference is zero hence there will be no difference.

6. No effect = No effect + No effect

Otras preguntas