Ex. 194
For each of the following, describe a transaction that will have the stated effect on the elements of the accounting equation.
(a)Increase one asset and decrease another asset.
(b)Increase an asset and increase a liability.
(c)Decrease an asset and decrease a liability.
(d)Increase an asset and increase stockholders' equity.
(e)Increase one asset, decrease one asset, and increase a liability.
Ex. 195
(a)Issued stock in exchange for cash.
(b)Purchased a computer for cash.
(c)Purchased office equipment with money borrowed from the bank.
(d)Paid the first month's utility bill.
(e)Collected an accounts receivable.
(f)Paid dividends.
Ex. 196
Selected transactions for Parton Company are listed below. List the number of the transaction and then describe the effect of each transaction on assets, liabilities, and stockholders' equity.
Sample: Issued common stock in exchange for cash investment.
The answer would be—Increase in assets and increase in stockholders' equity.
1.Paid monthly utility bill.
2.Purchased new display case for cash.
3.Paid cash for repair work on security system.
4.Billed customers for services performed.
5.Received cash from customers billed in 4.
6.Paid dividends.
7.Incurred advertising expenses on account.
8.Paid monthly rent.
9.Received cash from customers when service was rendered.