After reconciling its bank account, Watson Company made the following adjustments to its cash account:

Event No. Event Description
1. Corrected overstatement of expense
2. Recognized bank collection of an account receivable
3. Recognized interest revenue
4. Recognized bank service charge
5. Recognized NSF check from Beat

Required
Identify the event depicted in each adjustment as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Also explain how each adjustment affects the accounting equation by placing a + for increase, − for decrease, or NA for not affected under the following components of the accounting equation. The first event is recorded as an example.

Transcribed Image Text:

Stockholders' Equity Type of Event Event No. Common Stock Retained Earnings Liabilities Assets NA 1. AS NA