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    Intro To Account

    Uploaded by

    Zahran Alkhairy Azhar
    The document describes 9 transactions undertaken by Linebrink Lawn Care Company. Transaction 1 was an investment of cash to start the business, which increased assets and owner's equity. Transaction 2 was payment of monthly rent, which decreased assets and owner's equity. Transaction 3 was the purchase of equipment on account, which increased assets and liabilities. The remaining transactions included billing customers, withdrawing cash, receiving cash from customers, incurring an expense on account, purchasing equipment with cash, and receiving cash from customers for services performed.

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    Intro To Account

    Uploaded by

    Zahran Alkhairy Azhar
    184 views3 pages
    The document describes 9 transactions undertaken by Linebrink Lawn Care Company. Transaction 1 was an investment of cash to start the business, which increased assets and owner's equity. Transaction 2 was payment of monthly rent, which decreased assets and owner's equity. Transaction 3 was the purchase of equipment on account, which increased assets and liabilities. The remaining transactions included billing customers, withdrawing cash, receiving cash from customers, incurring an expense on account, purchasing equipment with cash, and receiving cash from customers for services performed.

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    Intro to account

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    The document describes 9 transactions undertaken by Linebrink Lawn Care Company. Transaction 1 was an investment of cash to start the business, which increased assets and owner's equity. Transaction 2 was payment of monthly rent, which decreased assets and owner's equity. Transaction 3 was the purchase of equipment on account, which increased assets and liabilities. The remaining transactions included billing customers, withdrawing cash, receiving cash from customers, incurring an expense on account, purchasing equipment with cash, and receiving cash from customers for services performed.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    184 views3 pages

    Intro To Account

    Uploaded by

    Zahran Alkhairy Azhar
    The document describes 9 transactions undertaken by Linebrink Lawn Care Company. Transaction 1 was an investment of cash to start the business, which increased assets and owner's equity. Transaction 2 was payment of monthly rent, which decreased assets and owner's equity. Transaction 3 was the purchase of equipment on account, which increased assets and liabilities. The remaining transactions included billing customers, withdrawing cash, receiving cash from customers, incurring an expense on account, purchasing equipment with cash, and receiving cash from customers for services performed.

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    © All Rights Reserved
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    E1-6 [Analyze the effect of transactions] Selected transactions for Linebrink Lawn Care Company are listed below.

    1. Made cash investment to start business.

    2. Paid monthly rent.

    3. Purchased equipment on account.

    4. Billed customers for services performed.

    5. Withdrew cash for owner’s personal use.

    6. Received cash from customers billed in (4).

    7. Incurred advertising expense on account.

    8. Purchased additional equipment for cash.

    9. Received cash from customers when service was performed.

    Answer

    Transaction Description Assets Liabilities Owner’s Equity Effect

    1 Made cash Increase Increase Invesment


    investment to
    start business.

    2 Paid monthly Decrease Decrease Expense


    rent.
    3 Purchased Increase Increase Type of loan
    equipment on
    account.
    4 Billed Increase Increase Revenue
    customers for
    services
    performed
    5 Withdrew cash Decrease Decrease Drawing
    for owner’s
    personal use.
    6 Received cash Increase Asset
    from composition
    customers change
    billed in (4).
    7 Incurred Increase Decrease Expense
    advertising
    expense on
    account.

    8 Purchased Increase Asset


    additional composition
    equipment for change
    cash.
    9 Received cash Increase Increase Revenue
    from
    customers
    when service
    was
    performed.

    E1-7 [Analyze the effect of transactions on assets, liabilities, and owner’s equity.] Thornton Computer Timeshare
    Company entered into the following transactions during May 2012.

    1. Purchased computer terminals 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.

    4. Provided computer services to Fisher Construction Company for $3,000 cash.

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

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

    7. Paid Digital Equipment for the terminals purchased in (1) above.

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

    Instructions Indicate with the appropriate letter whether each of the transactions above results in:

    (a) An increase in assets and a 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 owner’s equity.

    (g) An increase in owner’s equity and a decrease in liabilities.

    Answer

    Transaction Description Consequence

    1 Purchased computer terminals for (c) An increase in assets and an


    $20,000 from Digital Equipment on increase in liabilities.
    account.
    2 Paid $4,000 cash for May rent on (d) A decrease in assets and a
    storage space. decrease in owner’s equity.
    3 Received $17,000 cash from (a) An increase in assets and a
    customers for contracts billed in April. decrease in assets.

    4 4. Provided computer services to (b) An increase in assets and an


    Fisher Construction Company for increase in owner’s equity.
    $3,000 cash.

    5 Paid Northern States Power Co. (d) A decrease in assets and a


    $11,000 cash for energy usage in May. decrease in owner’s equity.
    6 Thornton invested an additional (b) An increase in assets and an
    $29,000 in the business. increase in owner’s equity.

    7 Paid Digital Equipment for the (e) A decrease in assets and a


    terminals purchased in (1) above. decrease in liabilities.

    8 Incurred advertising expense for May (f) An increase in liabilities and a


    of $1,200 on account. decrease in owner’s equity.

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