KAM Computer Timeshare Company entered into the following transactions durinig M

Question

KAM Computer Timeshare Company entered into the following transactions durinig May 2014

Decribe the effects of each transaction on assets, liabilities, and owner's equity.

1. Purchased computer terminals for $20,000 from Digital Equipment on account

2. Paid $4,000 cash for May rent on storage space

3. Recieved $17,000 cash from customers for contracts billed in April

4. Performed computer services to Viking Construction Company for $3,000

5. Paid Tri-States Power Co. $11,000 cash for energy usage in May

6. Kam invested in an additional $29,000 in the business

7. Paid Digital Equipment for the terminal purchase in (1) above

8. Incurred advertising expense for May of $1,200 on account.

Explanation / Answer

(a) An increase in assets and decrease in assets.
(b) An increase in assets and an increase in owner's equity.
(c) An increase in assets and an increase in liabilities.
(d) A decrease in assets and a decrease in owner's equity.
(e) A decrease in assets and a decrease in liabilities.
(f) An increase in liabilities and a decrease in owners equity.

(1) c
(2) d
(3) a
(4) b
(5) d
(6) b
(7) e
(8) f

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