Chapter 1, Problem 13SE

Transaction analysis (Learning Objective 5) 5-10 min.

Presented here are nine transactions and the analysis used to account for them. Evaluate each of the suggested accounting treatments, and indicate whether it is true or false.

1. 1. Received cash of $41,000 from the stockholders, who bought stock in the business

   Answer. Increase asset, increase stockholders' equity. ______ True ______ False

2. 2. Paid $600 cash to purchase supplies

   Answer. Increase asset, increase stockholders' equity. ______ True ______ False

3. 3. Earned service revenue on account, $1,200

   Answer. Increase asset, increase retained earnings. ______ True ______ False

4. 4. Purchased office furniture on account at a cost of $450

   Answer. Increase asset, increase liability. _____ True _____ False

5. 5. Received cash on account, $1,500

   Answer. Increase asset, decrease asset. _____ True _____ False

6. 6. Paid cash on account, $175

   Answer. Increase asset, increase liability. _____ True _____ False

7. 7. Sold land for $68,000 cash, which was the cost of the land.

   Answer Increase asset, decrease asset. _____ True _____ False

8. 8. Performed services and received cash of $825

   Answer Increase asset, increase revenue. _____ True _____ False

9. 9. Paid monthly office rent of $1,500

   Answer Decrease asset, increase stockholders' equity. _____ True _____ False