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Unformatted text preview: ACCT 100 Spring 2009 Exam 1 Homework Solutions: E1-6 Describe the effect of each transaction on assets, liabilities, and stockholder's equity. For example, the first answer is : (1) Increase in assets, no effect on liabilities, and increase in stockholder's equity. Assets Liability Stockholder's Equity 1. Sold common stock for cash to start business. Increase No Effect Increase 2. Paid monthly rent. Decrease No Effect Decrease 3. Purchased equipment on account. Increase Increase No Effect 4. Billed customers for services performed. Increase No Effect Increase 5. Paid dividends. Decrease No Effect Decrease 6. Received cash from customers billed in (4). Increase & Decrease No Effect No Effect 7. Incurred advertising expense on account. No Effect Increase Decrease 8. Purchased additional equipment for cash. Increase & Decrease No Effect No Effect 9. Received cash from customers when service was performed. Increase No Effect Increase E1-7: Indicate with the appropriate letter whether each of the transactions below result in: (a) an increase in assets and a decrease in assets. (b) an increase in assets and an increase in stockholder's equity. (c) an increase in assets and an increase in liabilities. (d) a decrease in assets and a decrease in stockholder's equity. (e) a decrease in assets and a decrease in liabilities. (f) an increase in liabilities and a decrease in stockholder's equity. (g) an increase in stockholder's equity and a decrease in liabilities. 1. Purchased computer terminals for $20,000 from Digital Equipment on account. c 2. Paid $4,000 cash for May rent on storage space. d 3. Received $15,000 cash from customers for contracts billed in April. a 4. Provided computer services to Fisher Construction Company for $3,000 cash. B 5. Paid Northern States Power Co. $11,000 cash for energy usage in May. D 6. Stockholders invested an additional $32,000 in the business. B 7. Paid Digital Equipment for the terminals purchased in (1) above. E 8. Incurred advertising expense for May of $1,200 on account. F E1-8: An analysis of the transactions made by S. Moses & Co., a certified public accounting firm, for the month of August is shown below. Each increase and decrease in stockholder's equity is explained. Cash + Accounts Receivable + Supplies + Office Equipment = Accounts Payable + Stockholder's Equity 1. +$15,000 +$15,000 Investment 2.-2,000 +$5,000 +$3,000 3.-750 +$750 4. +4,600 +$3,700 +8,300 Service Revenue 5.-1,500 -1,500 6.-2,000 -2,000 Dividends...
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- Spring '08
- Financial Accounting, Expense