Question

The following transactions occur for Badger Biking Company during the month of June:

(a) Provide services to customers on account for $50,000.
(b) Receive cash of $42,000 from customers in (a) above.
(c) Purchase bike equipment by signing a note with the bank for $35,000.
(d) Pay utilities of $5,000 for the current month.

Analyze each transaction and indicate the amount of increases and decreases in the accounting equation.
Assets = Liabilities + Stockholder's equity

Answer 1

Each transaction for Badger Biking Company affects different accounts on the balance sheet, either increasing or decreasing them.

Step-by-step explanation:

Let's analyze each transaction for Badger Biking Company:

• Transaction (a): Providing services to customers on account for $50,000 increases both accounts receivable (an asset) and revenue (which ultimately increases equity).

• Transaction (b): Receiving cash of $42,000 from customers in the transaction (a) decreases accounts receivable but has no effect on equity.

• Transaction (c): Purchasing bike equipment by signing a note with the bank for $35,000 increases both equipment (an asset) and a liability (note payable).

Transaction (d): Paying utilities of $5,000 for the current month decreases cash (an asset) but has no effect on equity.

In summary, each transaction affects different accounts on the balance sheet, either increasing or decreasing them. It is important to track and record these changes to ensure accurate financial reporting.

Answer 2

Analyze each transaction and indicate the amount of increases and decreases in the accounting equation.

Assets = Liabilities + Stockholder's equity

Step-by-step explanation:

(a) Provide services to customers on account for $50,000.

Account receivable=equity ( net income (revenue)

50000=50000

(b) Receive cash of $42,000 from customers in (a) above.

Cash=-(account receivable)

(c) Purchase bike equipment by signing a note with the bank for $35,000.

equipment=account payable

(d) Pay utilities of $5,000 for the current month.

-cash=-equity ( expenses)