Transactions Arrowhead Delivery Service is owned and operated by Gates Deeter. T

Question

Transactions

Arrowhead Delivery Service is owned and operated by Gates Deeter. The following selected transactions were completed by Arrowhead Delivery Service during August:

Indicate the effect of each transaction on the accounting equation elements (Assets, Liabilities, Owner's Equity, Drawing, Revenue, and Expense). Also indicate the specific item within the accounting equation element that is affected. To illustrate, the answer to (1) follows:

(1) Asset (Cash) increases by $25,000; Owner's Equity (Gates Deeter, Capital) increases by $25,000.

Element Item Direction 1. Received cash from owner as additional investment, $25,000. Asset Cash Increases Owner's Equity Gates Deeter, Capital Increases 2. Paid creditors on account, $3,750. 3. Billed customers for delivery services on account, $22,400. 4. Received cash from customers on account, $11,300. 5. Paid cash to owner for personal use, $6,000.

Explanation / Answer

Element

Item

Direction

1. Received cash from owner as additional investment, $25,000.

Asset

Cash

Increases

Owner's Equity

Gates Deeter, Capital

Increases

2. Paid creditors on account, $3,750.

Asset

Cash

decreases

Liability

Accounts Payable

decreases

3. Billed customers for delivery services on account, $22,400.

Asset

Accounts Receivable

increases

Revenue

Delivery Service Fees

increases

4. Received cash from customers on account, $11,300.

Asset

Cash

increases

Asset

Accounts Receivable

decreases

5. Paid cash to owner for personal use, $6,000.

Asset

Cash

decreases

Asset

Gates Deeter, Drawing

increases

Element

Item

Direction

1. Received cash from owner as additional investment, $25,000.

Asset

Cash

Increases

Owner's Equity

Gates Deeter, Capital

Increases

2. Paid creditors on account, $3,750.

Asset

Cash

decreases

Liability

Accounts Payable

decreases

3. Billed customers for delivery services on account, $22,400.

Asset

Accounts Receivable

increases

Revenue

Delivery Service Fees

increases

4. Received cash from customers on account, $11,300.

Asset

Cash

increases

Asset

Accounts Receivable

decreases

5. Paid cash to owner for personal use, $6,000.

Asset

Cash

decreases

Asset

Gates Deeter, Drawing

increases

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