Transactions The selected transactions below were completed by Silverado Deliver

Question

Transactions The selected transactions below were completed by Silverado Delivery Service during February: Indicate the effect of each transaction on the accounting equation by choosing the appropriate letter from the following list: Increase in an asset, decrease in another asset. Increase in an asset, increase in a liability. Increase in an asset, increase in owner's equity. Decrease in an asset, decrease in a liability. Decrease in an asset, decrease in owner's equity. 1. Received cash from owner as additional investment, $25,000. 2. Purchased supplies for cash, $750. 3. Paid rent for February, $3,000. 4. Paid advertising expense, $1,500. 5. Received cash for providing delivery services, $16,800. 6. Billed customers for delivery services on account, $32,500. 7. Paid creditors on account, $1,400. 8. Received cash from customers on account, $23,770. 9. Determined that the cost of supplies on hand was $275 and $475 of supplies had been used during the month. 10. Paid cash to owner for personal use, $5,000.

Explanation / Answer

Answer:

1. Increase in assets, increase in owner's equity

Explanation: here cash is assets and investment is equity

2. Increase in assets, decrease in another assets

Explanation: supplies is increasing & cash is decreasing.

3. Decrease in assets, decrease in owner's equity.

Explanation: cash is decreasing & owner's equity is decreasing due to expense.

4. Decrease in assets, decrease in owner's equity.

Explanation: cash is decreasing & owner's equity is decreasing due to expense.

5. Increase in assets, increase in owner's equity.

Explanation : cash is increasing & owner's equity is increasing due to revenue.

6.Increase in assets, increase in owner's equity.

Explanation : accounts receivable is increasing & owner's equity is increasing due to revenue.

7. Decrease in assets, decrease in liabilities.

Explanation: cash is assets & creditors is liabilities.

8. Increase in assets, decrease in another assets.

Explanation: cash is increasing & accounts receivable is decreasing.

9. Decrease in assets, decrease in owner's equity

10. Decrease in assets, decrease in owner's equity

Explanation : cash is decreasing & equity is decreasing due to drawings.

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