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