Question

TRANSACTIONS

1. Paid $2,100 for utilities.
2. Performed services for $10,500 on account
3. Received $6,500 from charge account customers
4. Paid salaries of $4,500 to employees
5. Paid $8,000 to a creditor on account.
6. Owner invested $90,000 in the business.
7. Purchased $26,700 of supplies on account.
8. Purchased equipment for $21,000 cash
9. Paid $6,000 for rent (in advance).
10. Performed services for $7,800 cash.
Indicate the impact of each of the transactions below on the fundamental accounting equation (Assets Liabilities+Owner's Equity) by placing a "+" to indicate an increase and a "-" to indicate a decrease. The first transaction is entered as an example. (If transaction causes one account to increase and another to decrease within the same classification of the accounting equation, select +/-)
Assets Liabilities +Owner's Equity
Transaction 1
Transaction 2
Transaction 3
Transaction 4
10. Performed services for $7,800 cash.
indicate the impact of each of the transactions below on the fundamental accounting equation (Assets = Liabilities + Owner's Equity) by placing a "+" to indicate an increase and a "-" to indicate a decrease. The first transaction is entered as an example. (If transaction causes one account to increase and another to decrease within the same classification of the accounting equation, select
+1) Assets Liabilities Owner's Equity
Transaction 1
Transaction 2
Transaction 3
Transaction 4
Transaction 5
Transaction 6
Transaction 7
Transaction 8
Transaction 9
Transaction 10

Answer 1

Transactions and their Effects on the Accounting Equation

1. Paid $2,100 for utilities.

Assets (Cash -$2100) = Liabilities + Equity (Retained Earnings -$2100)

2. Performed services for $10,500 on account

Assets (Accounts Receivable +$10,500) = Liabilities + Equity (Retained Earnings +$10,500)

3. Received $6,500 from charge account customers

Assets (Cash +$6,500; Accounts Receivable -$6,500) = Liabilities + Equity

4. Paid salaries of $4,500 to employees

Assets (Cash -$4,500) = Liabilities + Equity (Retained Earnings -$4,500)

5. Paid $8,000 to a creditor on account.

Assets (Cash -$8,000) = Liabilities (Accounts payable -$4,500) + Equity

6. Owner invested $90,000 in the business.

Assets (Cash +$90,000) = Liabilities + Equity (Common Stock +$90,000)

7. Purchased $26,700 of supplies on account.

Assets (Inventory +$26,700) = Liabilities + Equity (Retained Earnings +$26,700)

8. Purchased equipment for $21,000 cash

Assets (Equipment +$21,000; Cash -$21,000) = Liabilities + Equity

9. Paid $6,000 for rent (in advance).

Assets (Cash -$6,000; Prepaid Rent +$6,000) = Liabilities + Equity

10. Performed services for $7,800 cash.

Assets (Cash +$7,800) = Liabilities + Equity (Retained Earnings + $7,800)

Step-by-step explanation:

The effects of transactions on the accounting equation of assets = liabilities + equity demonstrates that each transaction affects two accounts and makes the equation to remain in balance.