Untitled- Edited T6 Three former college classmates have decided to pool a varie

Question

Untitled- Edited T6 Three former college classmates have decided to pool a variety of work experiences by opening a store near campus sell wireless equipment to students. The business has been incorporated as University Wireless. Required: Several transactions occurred in March. Each is described separately in this folder. For each transaction, indicate the accounts that are affected, whether they increase or decrease, and the amount of the increase or decrease. YOU MUST FOLLOW THE INSTRUCTIONS BELOW. IF YOU DO NOT, YOU MAY KNOW THE CORRECT ENTRY BUT THE COMPUTER WILL NOT RECOGNIZE IT AND YOU WILL NOT RECEIVE CREDIT. After each transaction description, there are several "Account" submission boxes and corresponding "Amount" submission boxes. To indicate the accounts that you think are affected, choose them from the drop-down menu. But you MUST select them in the order that they are listed in the menu. FOR EXAMPLE, if you think that Cash and Inventory are affected by a particular transaction, you must record the Cash entry first and the Inventory entry second because that is the order that they are listed in the drop-down menu. If you record the Inventory entry first and the Cash entry second, even if they are the correct accounts and even if you have the correct dollar amounts, your answer will be considered wrong. When you record the dollar amounts, be sure to use a minus sign to indicate a decrease in the account. You do not need to use a plus sign to indicate an increase. Finally, there are always more "Account" and "Amount" submission boxes available than are necessary. When you have indicated all the accounts that are affected by the transaction, select "Leave Blank" from the drop-down menu for EACH of the remaining "Account" submission boxes (you can leave the "Amount" boxes blank). For transactions 3, 4, 5, and 8, you are given additional instructions. Pay careful attention to them! Transaction 8 is worth 4 points. The other transactions are worth 2 points each.

Explanation / Answer

With this given transaction 2, three accounts will be affected i.e. cash account, inventory account and accounts payable account. Cash account will decrease by $25,200 (i.e. 70% of Inventory purchase cost $36,000), inventory account will increase by $36,000 and remaining 30% of inventory purchase cost $36,000 i.e. $10,800 will be credited to accounts payable account (i.e. accounts payable will increase).

As it is given in the instructions that accounts affected should be shown in the order given in drop down menu, therefore cash account will be recorded in the first entry then inventory account in the second entry and accounts payable in the third entry and leave blank option should be recorded in the remaining two entries.

The required accounts affected along with their amounts are shown as follows:-

Account: Cash Dollar amount: -25,200

Account: Inventory Dollar amount: 36,000

Account: Accounts Payable Dollar amount: 10,800

Account: Leave Blank Dollar amount:

Account: Leave Blank Dollar amount:

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