Question: Show how each of the following transactions affects the basic

Show how each of the following transactions affects the basic accounting equation by preparing a table like the one in Exhibit 2-3, and identify the ones that have an immediate impact on the statement of income and/or the statement of cash flows:
Exhibit 2-3
a. Bought parts inventory for $15,000, on account. (The company repairs and services vehicles, and will use these parts for repairs.)
b. Paid $12,000 to suppliers as partial payment for the purchases that were made in transaction “a.”
c. Received $20,000 in cash for repairing and servicing vehicles; another $5,000 of work was done on account.
d. Collected $3,000 from customers for the work that was done on account in transaction “c.” The balance remains outstanding.
e. In the repair work done in transaction “c,” $10,000 of the parts and supplies inventory was used.
f. The owners of the company invested a further $25,000 in the business, and 10,000 additional common shares were issued to them.
g. Received utility (electricity, water, and telephone) bills for the month that totalled $600. Paid all these bills except for $100 that will be paid next month.
h. Borrowed $50,000 from the bank.
i. Bought a vehicle hoist for $45,000.
j. Paid the employees their wages for the month, $9,000.
k. Recorded accrued interest of $200 on the bank loan. The interest will be paid when the loan is due, in one year.

Sale on SolutionInn
  • CreatedJune 11, 2015
  • Files Included
Post your question