Question

M2-9 Determining Financial Statement Effects of Several Transactions [LO 2-2] For each of the following transactions of Spotlighter, Inc., for the month of January, indicate the accounts, amounts, and direction of the effects on the accounting equation. A sample is provided. (Enter any decreases to account balances with a minus sign.) (Sample) Borrowed $3,940 from a local bank on a note due in six months. Received $4,630 cash from investors and issued common stock to them. Purchased $1,000 in equipment, paying $200 cash and promising the rest on a note due in one year. Paid $300 cash for supplies. Bought and received $700 of supplies on account

Answer 1

Assets = Liabilities + Stockholder's

Equity

(a) cash = $3,940 Notes payable = $3,940

(short term)

(b) cash = $4,630 Common

stock =$4,630

(c) Equipment = $1000 Notes payable = $800

Cash = (-$200) (short term)

(d) Supplies = $300

Cash = (-$300)

(e) Supplies = $700 Accounts receivable = $700