empt.php?attempt 9654 71&page-6&scrollpos-467.q C| secure: https://mybusinesscou
ID: 2332110 • Letter: E
Question
empt.php?attempt 9654 71&page-6&scrollpos-467.q C| secure: https://mybusinesscourse.com/platfor E Menu Remember to use negative signs with your answers, when appropriate. Income Statement Balance Sheet Earned Capital Noncash LiabilitiesCapital Contributed Transection Cash Asset Revenue Expenses Assets (a) Borrow (28,300 from local b) Pay 4,500 premium for coverage for (c) Purchase vehicle for (a) Purchase 3,750 of supplies on account (ie pay supplier (e) Place order for 1,500 of supplies to You have correctly selected P L1950Explanation / Answer
(a). Borrow 28,500 from local bank: Here cash balance increases by 28,500 and liabilities also increase by 28,500. Hence, the answer is as below.
Cash asset= +28,500
Liabilities= +28,500
(b). Pay 4,500 insurance premium for coverage for following year: Cash is reduced by 4,500 and non cash assets is increased by 4,500. Insurance premium is pays in advance for next year. Hence it is an asset. In the mean time cash is paid. Hence cash is reduced. Final answer is as below.
Cash asset= -4,500
Non cash asset= +4,500
(c). Purchase vehicle for 48,000: Here cash is paid to purchase the vehicle. Hence cash is reduced. In the mean time asset is purchased. Hence increase in asset balance. Final answer is as below.
Cash asset= -48,000
Non cash asset= +48,000
(d). Purchase and receive 3,750 of office supplies on account: This means materials purchased on credit basis. There is no impact on cash balance. However liabilities increased I.e, creditors. In the mean time, asset is also increased I.e, inventory. Final answer is as below.
Non cash assets= +3,750
Liabilities= +3,750
(e). Place order for 1,500 of additional supplies to be delivered next month: Here, there will be no impact on any balances. Why because, there will be no cash payment and there will be no asset purchased. This transaction is just and order placement.
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