Textbook Problem

Transactions

The following selected transactions were completed by Cota Delivery Service during July:

1. 1. Received cash in exchange for common stock, $35,000.
2. 2. Purchased supplies for cash, $1,100.
3. 3. Paid rent for October, $4,500.
4. 4. Paid advertising expense, $900.
5. 5. Received cash for providing delivery services, $33,000.
6. 6. Billed customers for delivery services on account, $58,000.
7. 7. Paid creditors on account, $2,900.
8. 8. Received cash from customers on account, $27,500.
9. 9. Determined that the cost of supplies on hand was $300 and $8,600 of supplies had been used during the month.
10. 10. Paid cash dividends, $2,500.

Indicate the effect of each transaction on the accounting equation by listing the numbers identifying the transactions, (1) through (10), in a column, and inserting at the right of each number the appropriate letter from the following list:

1. A. Increase in an asset, decrease in another asset.
2. B. Increase in an asset, increase in a liability.
3. C. Increase in an asset, increase in stockholders’ equity.
4. D. Decrease in an asset, decrease in a liability.
5. E. Decrease in an asset, decrease in stockholders’ equity.