For each of the following transactions, show the effects on the entities involved. As was illustrated in the chapter, use the Assets = Liabilities + Owners’ equity (A = L + OE) equation to demonstrate the effects. Using the accounts in the illustration below, show the dollar amounts and indicate whether the effects are increases or decreases.
The Nebraska State Hospital collects $1,000 from the Blue Cross Health Care Plan.

1. Borrowing of $150,000 on a home mortgage from Fidelity Savings by David Stratton.
2. Payment of $10,000 principal on the preceding mortgage. Ignore interest.
3. Purchase of a 2-year subscription to Businessweek magazine for $90 cash by Cindy Silverton.
4. Purchase of used trucks by the U.S. Postal Service for $10 million cash from FedEx. The trucks were carried in the accounts at $10 million (original cost minus accumulated depreciation) by FedEx.
5. Purchase of U.S. government bonds for $100,000 cash by Lockheed Corporation.
6. Cash deposits of $18 on the returnable bottles sold by Safeway Stores to a retail customer, Philomena Simon.
7. Collections on open account of $100 by an Office Depot store from a retail customer, Gerald Arrow.
8. Purchase of traveler’s checks of $1,000 from American Express Company by William Spence.
9. Cash deposit of $600 in a checking account in Bank of America by Jeffrey Hoskins.
10. Purchase of a United Airlines “supersaver” airline ticket for $400 cash by Peter Tanlu on June 15. The trip will be taken on September10.

  • CreatedFebruary 20, 2015
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