Question : 77. Several transactions listed below, with the accounting equation stated to : 1224863

 

77. Several transactions are listed below, with the accounting equation stated to the right side of each. Use the following identification codes to indicate the effects of each transaction on the accounting equation: I = Increase; D = Decrease; NE = No net effect. Write your answers in the space provided under the accounting equation, being sure to include an identification code for each element of the accounting equation. An example is provided before the first transaction. 

 

 

 

 

 

 

Stockholders’

 

 

Assets

=

Liabilities

+

Equity

Example: Common stock is issued to investors in the company

I

 

NE

 

I

 

 

 

 

 

 

 

A)

Services are sold for cash.

 

 

 

 

 

B)

Equipment is purchased on credit.

 

 

 

 

 

C)

Payment is made for equipment purchased on credit.

 

 

 

 

 

D)

Services are sold for credit.

 

 

 

 

 

E)

Collection of accounts receivable from customer.

 

 

 

 

 

F)

Dividends are paid to stockholders.

 

 

 

 

 

G)

Land and building are acquired in exchange for shares of common stock.

 

 

 

 

 

H)

Utility bill is received and recorded; will be paid later.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

78. Listed below are selected accounts from the financial statements of Ellison Company for the year ended December 31. In the blank spaces provided for each account, indicate what type of account it is, its normal balance, and the debit/credit rules for increasing and decreasing it. Use the following abbreviations for your answer: 

 

 

Normal

Rules to Increase or

 

Type of Account

Account Balance

Decrease the Account

 

A = Asset

Dr = Debit

Dr = Debit

 

L = Liability

Cr = Credit

Cr = Credit

 

SE = Stockholders’ equity

 

 

 

R = Revenue

 

 

 

E = Expense

 

 

 

D = Dividend

 

 

 

 

 

 

 

 

 

Type of

 

Normal

 

Rule to

 

Rule to

 

 

Account

 

Balance

 

Increase

 

Decrease

Example: Cash

A

 

Dr

 

Dr

 

Cr

a.

Accounts payable

 

 

 

 

 

 

 

b.

Retained earnings

 

 

 

 

 

 

 

c.

Prepaid insurance

 

 

 

 

 

 

 

d.

Service revenues

 

 

 

 

 

 

 

e.

Notes payable

 

 

 

 

 

 

 

f.

Intangibles

 

 

 

 

 

 

 

g.

Common stock

 

 

 

 

 

 

 

h.

Salaries expense

 

 

 

 

 

 

 

i.

Accounts receivable

 

 

 

 

 

 

 

j.

Unearned revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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