Arrowhead Delivery Service is owned and operated by Gates Deeter. The following selected transactions were completed by Arrowhead Delivery Service during August:
1. Received cash in exchange for capital stock, $25,000.
2. Paid creditors on account, $3,750.
3. Billed customers for delivery services on account, $22,400.
4. Received cash from customers on account, $11,300.
5. Paid dividends, $6,000.
Indicate the effect of each transaction on the accounting equation elements (Assets, Liabilities, Stockholders’ Equity Capital Stock, Dividends, Revenue, and Expense). Also indicate the specific item within the accounting equation element that is affected. To illustrate, the answer to (1) is shown below.
(1) Asset (Cash) increases by $25,000; Stockholders’ Equity (Capital Stock) increases by $25,000.