Juniper Delivery Service had the following selected transactionsduring May: 1. R

Question

Juniper Delivery Service had the following selected transactionsduring May:

1.      Received cash fromissuance of capital stock, $50,000.

2.      Received cash for providingdelivery services, $18,000

3.      Paid advertising expense,$1,000.

4.      Billed customers for deliveryservices, $35,000.

5.      Purchased supplies for cash,$2,100.

6.      Paid creditors, $2,000.

7.      Paid rent for May, $2,000.

8.      Received cash from customers onaccount, $16,700.

9.      Determined that the cost ofsupplies on hand was $1,200; therefore, $900 of supplies had beenused during the month.

10. Paid dividends, $1,500.

Indicate the effect of each transaction on the accountingequation by listing the numbers identifying the transactions, (1)through (10), in a vertical column, and inserting at the right ofeach number the appropriate letter from the following list:

a.       Increase in an asset,decrease in another asset.

b.      Increase in an asset, increasein a liability.

c.       Increase in an asset,increase in stockholders’ equity.

d.      Decrease in an asset, decreasein a liability

e.       Decrease in an asset,decrease in a stockholders’ equity.

Explanation / Answer

1 Increase in asset, increase incapital 2 Increase in asset, increase in capital 3 Decrease in asset, Decrease in capital 4 increase in asset, increase in capital 5 Decrease in asset, increase in another asset 6 Decrease in asset, Decrease in liabilities 7 Decrease in asset, Decrease in capital 8 Increase in asset, decrease in another asset 9 Decrease in asset, Decrease in capital 10 Decrease in asset, Decrease in Capital

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