Question

The following transactions occurred during the month of August 2019 for the Washington Apple Company:

1 Issued 10,000 shares of stock in exchange for $100,000 in cash.
2 Purchased equipment at a cost of $70,000 and paid cash.
3 Purchased supplies on account for $5000.
4 Made cash sales of $45,000 in the month of August.
5 Paid rent on a warehouse in amount of $7000 for August.
Required: Analyze each transaction and show the effect of each using for increases and for decreases:

Answer 1

1. Increase in equity

2. increase in asset

3. increase in liability

4. Increase in revenue

5. Increase in expense

Step-by-step explanation:

Assets is anything that provides future benefit to a company. Assets are reported in the balance sheet of the company and the company's reliability is measured on the basis of strength of its assets. Liability is the obligation that the company has to pay in future. These asset to liability ratio should be atleast 1 for the organizations.