Bridgeport Delivery Service is owned and operated by Jerome Foley. The following selected transactions were completed by Bridgeport Delivery Service during February:1. Received cash from owner as additional investment, $40,000.2. Billed customers for delivery services on account, $13,750.3. Paid creditors on account, $2,500.4. Received cash from customers on account, $9,000.5. Paid cash to owner for personal use, $1,000.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 $40,000; Owner’s Equity (Jerome Foley, Capital) increases by $40,000.

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Asked Nov 30, 2019
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Bridgeport Delivery Service is owned and operated by Jerome Foley. The following selected transactions were completed by Bridgeport Delivery Service during February:
1. Received cash from owner as additional investment, $40,000.
2. Billed customers for delivery services on account, $13,750.
3. Paid creditors on account, $2,500.
4. Received cash from customers on account, $9,000.
5. Paid cash to owner for personal use, $1,000.
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 $40,000; Owner’s Equity (Jerome Foley, Capital) increases by $40,000.

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Expert Answer

Step 1

Accounting equation:

 

Accounting equation is an accounting tool expressed in the form of equation, by creating a relation between resources or assets of a company and claims of resources to creditors and owners. Accounting equation is expressed as:

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Assets Liabilities Owners' Equity (Owners' invetsments)+(Owners' withdrawals) +{(Revenues)-(Expenses) Assets Liabilities+

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Step 2

Indicate the effect of each transaction on the accounting equation.

 

1.

Asset (cash) increases by $40,000; Owners’ equity (Person JF, Capital) increases by $40,000.

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|(Owners'invetsments)+(Owners'withdrawals) Person JF, Capital Assets Liabilities+Cash +S40,000 +S40,000

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Step 3

2.

Asset (Accounts receivable) increases y $13,750; Revenue (Del...

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Assets Liabilities + Owners' Equity Assets=[Liabiliti es+{(Revenues)-(Expenses)} Accounts receivable Delivery service fee $13,750 +S13,750

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