Question

Analyze the impact of transactions on the accounting equation (LO2-2) Below is a list of activities for Jayhawk Corporation Required: Select from the activities of Jayhawk Corporation whether the transaction increases, decreases, or has no effect on assets, liabilities, and stockholders' equity. The first item is provided as an example,

Transaction Assets = Liabilities + Stockholders +Equity
Increase = No effect + Increase
1. Issue common stock in exchange for cash.
2. Purchase business supplies on account.
3. Pay for legal services for the current month.
4. Provide services to customers on account
5. Pay employee salaries for the current month
6. Provide services to customers for cash.
7. Pay for advertising for the current month
8. Repay loan from the bank
9. Pay dividends to stockholders
10. Receive cash from customers in (4) above-
11. Pay for supplies purchased in (2) above. = -

Answer 1

Transaction Assets = Liabilities + Stockholder's

Equity

1 Issue common stock Increase = No Effect + Increase

in exchange for cash

2 Purchase business Increase = Increase + No Effect

supplies on account

3 Pay for legal service Decrease = No Effect + Decrease

for the current month

4 Provide services to Increase = No Effect + Increase

customer on account

5 Pay employee salaries Decrease = No Effect + Decrease

for the current month

6 Provide services to Increase = No Effect + Increase

customer for cash

7 Pay for advertising Decrease = No Effect + Decrease

for the current month

8 Repay loan from Decrease = Decrease + No Effect

the bank

9 Pay dividends to Decrease = No Effect + Decrease

stockholders

10 Receive cash from No Effect = No Effect + No Effect

customer in (4) above

11 Pay for supplies Decrease = Decrease + No Effect

purchased in (2) above