moodlle questions.docx - Optional exercisesu2014Solutions...

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Optional exercises—SolutionsExercise 1Presented here are five economic events. For each item, indicate whether the event increased(+), decreased (–), or had no effect (NE) on assets, liabilities, and stockholders’ equity.
1.Received cash for services rendered.
2.Purchased supplies on account.
3.Paid employees' salaries.
4.Dividends paid in cash.
5.Expenses paid in cash.
Exercise 2For each of the following accounts indicate the effect of a debit or a credit on the account andthe normal balance. Increase (+), Decrease (–).AnswerDebit _Credit_Normal Balance1.Salaries and Wages Expense.__+_ _ ___–______Dr___2.Accounts Receivable__+_______–______Dr___3.Service Revenue.__–_______+______Cr___4.Dividends__+_______–______Dr___5.Retained Earnings__–_______+______Cr___
Exercise 3Selected transactions for Stockton Corporation during its first month in business are presented below:Sept. 1Issued common stock in exchange for $30,000 cash received from investors.5Purchased equipment for $20,000, paying $2,000 in cash and the balance on account.25Paid $6,000 cash on balance owed for equipment.30Paid $1,000 cash dividend.Stockton's chart of accounts shows: Cash, Equipment, Accounts Payable, Common Stock, and Dividends.(a)

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