For each of the following transactions for New Idea Corporation, give the accoun

Question

For each of the following transactions for New Idea Corporation, give the accounting equation effects of the adjustments required at the end of the month on July 31: (Enter any decreases to Assets, Liabilities, or Stockholders' Equity with a minus sign.) b.Owed wages to 5 employees who worked four days at $95 each per day at the end of July. The company will pay employees at the end of the first week of August. : c On July 1, loaned money to an employee who agreed to repay the loan in one year along with $1,140 for one full year of interest. No interest has been recorded yet. Transaction Assets Liabilities Stockholders' Equity

Explanation / Answer

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Transactions Assets = Liabilities + Stockholders equity a No effect Accounts payable will increase by $590 Net income will decrease by $590 b No effect Wages and salaries payable will increase by $1,900 ($95*5*4days) Net income will decrease by $1,900 c Cash account will decrease when loan given and loan receivable will increase for same amount. Also accrued interest for 1 month will increase No effect Interest income for 1 month will increase ($1,140/12 = $95)

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