Question

Transactions The selected transactions below were completed by Cota Delivery Service during July: Indicate the effect of each transaction on the accounting equation by choosing the appropriate letter from the following list: Increase in an asset, decrease in another asset. Increase in an asset, increase in a liability. Increase in an asset, increase in stockholders' equity. Decrease in an asset, decrease in a liability. Decrease in an asset, decrease in stockholders' equity. 1. Received cash in exchange for common stock, $35,000. c 2. Purchased supplies for cash, $1,100. 3. Paid rent for October, $4,500. b 4. Paid advertising expense, $900. 5. Received cash for providing delivery services, $33,000. 6. Billed customers for delivery services on account, $58,000. 7. Paid creditors on account, $2,900. 8. Received cash from customers on account, $27,500. 9. Determined that the cost of supplies on hand was $300 and $8,600 of supplies had been used during the month. 10. Paid cash dividends, $2,500.

Answer 1

Answer & Explanation:

1.- Increase in assets and equity

(cash is asset and common stockequity)

2.- no effect

(one asset cash is rtaded for another, supplies)

3.- Decrease in Assets and Equity

(expense decrease the cash (assets) and equity (income))

4.- Decrease in Assets and Equity

(expense decrease the cash (assets) and equity (income))

5.- Increase in assets and equity

(cash increase equity increase (service revenue))

6.- Increase in assets and equity

(account receivable increase equity increase (service revenue))

7.- Decrease in Assets and Liablity

(ap decrease and cash decrease)

8.- no effect

(one asset increases cash. Another decreases, account receivable)

9.- Decrease in Assets and Equity

(expense decrease the suppplies (assets) and equity (income))

10.- Decrease in Assets and Equity

(less cash less retained earnings)