ACCOUNTIN Weygandt, Accounting Principles, 12e Gradebook ORION Downloadable eTex

Question

ACCOUNTIN Weygandt, Accounting Principles, 12e Gradebook ORION Downloadable eTextbook nt Describe the effect of each transaction on assets, labilities, and owner's equity. 1. Purchased computers for $20,000 from Digital Equipment on account 2. Paid $4,000 cash for May rent on storage space. 3. Received $17,000 cash from customers for contracts billed in April Performed computer services to Viking Construction Company for $4,000 cash. 5. Paid Tri-State Power Co. $11,000 cash for energy usage in May 6 Falske imvested an additional $29,000 in the business. 4. 7. Paid Digital Equipment for the computers purchased in (1) above. 8. incurred advertising expense for May of $1,200 on account. 02 2 3 4 W E RT Y UO

Explanation / Answer

The effects of the given transactions will be described as follows:

Transaction Effect 1 Purchased computers for $20,000 from Digital Equipment on account Assets and liabilities will increase by $20,000. There will be no effect on owner's equity. 2 Paid $4,000 cash for May rent on storage space. Assets and owner's equity will decrease by $4,000. There will be no effect on liabilities. 3 Received $17,000 cash from customers for contracts billed in April. No effect on assets, liabilities, or owner's equity. Cash will increase and accounts will decrease. Therefore, total assets will remain unchanged. 4 Performed computer services for $4,000 cash. Assets and owner's equity will increase by $4,000. There will be no effect on liabilities. 5 Paid $11,000 cash for energy usage in May. Assets and owner's equity will decrease by $11,000. There will be no effect on liabilities. 6 Invested an additional $29,000 in the business. Assets and owner's equity will increase by $29,000. There will be no effect on liabilities. 7 Paid Digital Equipment for the computers purchased in (1) above. Assets and liabilities will decrease by $20,000. There will be no effect on owner's equity. 8 Incurred advertising expense for May of $1,200 on account. Liabilities will increase and owner's equity will decrease by $1,200. There will be no effect on assets.

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