Accounting GBA 5205 Survey of Accounting, Fifth edition by Edmonds (ISBN 9781307
ID: 2401044 • Letter: A
Question
Accounting GBA 5205
Survey of Accounting, Fifth edition by Edmonds (ISBN 9781307078473)
Please do Events 6-10. Event 4 is listed below as an example.
After completing Chapter 3, identify the fo the accounting equation, if and how it affects net income, and if and how it affects cash. Using Event 1 as an example: Purchased merchandise inventory for cash: assets: + inventory and - cash; no effect on liabilities or equity; no effect on net income, - cash. With your answers, you need to explain your reasoning and how you solved the problem. Do not follow the instructions in the textbook but complete based on the example given above.Explanation / Answer
Solution for event 6 to 10
Event No
Assets =
Liabilities +
Equity
Cash Flow
6a
.+Accounts Receivables
No effect
.+Retained Earnings
No effect
6b
.-Inventory
No effect
.-Retained Earnings
No effect
7
.-Cash
No effect
.-Cash
8
.+Inventory
No effect
No Effect
.-Cash
9a
.+Cash
No effect
No Effect
.+Cash
9b
.-Accounts Receivables
No Effect
No Effect
No Effect
10
.-Cash
No effect
.-Retained Earnings
.-Cash
Explanation
6a
Goods are sold on account so Accounts receivable will increase which is an asset. No effect on liability and Retained earnings will increase.
6b
Due to sale Inventory will decrease and similarly retained earnings will decrease hence decrease in Equity
7
Selling and administration expenses decreases Income and cash is paid so cash asset will decrease too.
8
Transport in expenses increase the cost of Inventory so inventory is increased and cash is paid so cash asset will decrease.
9a
Cash is increased due to receipts against debit balance of customer.
9b
Accounts receivables have decreased since cash is received against it.
10
Transport out is a revenue expenses and paid at the time of sale so income is decreased amd cash is decreased because its paid in cash.
Solution for event 6 to 10
Event No
Assets =
Liabilities +
Equity
Cash Flow
6a
.+Accounts Receivables
No effect
.+Retained Earnings
No effect
6b
.-Inventory
No effect
.-Retained Earnings
No effect
7
.-Cash
No effect
.-Cash
8
.+Inventory
No effect
No Effect
.-Cash
9a
.+Cash
No effect
No Effect
.+Cash
9b
.-Accounts Receivables
No Effect
No Effect
No Effect
10
.-Cash
No effect
.-Retained Earnings
.-Cash
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