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Arrowhead Delivery Service is owned and operated by Gates Deeter. The following selected
transactions were completed by Arrowhead Delivery Service during August:
1. Received cash from owner as additional investment, $25,000.
2. Paid creditors on account, $3,750.
3. Billed customers for delivery services on account, $22,400.
4. Received cash from customers on account, $11,300.
5. Paid cash to owner for personal use, $6,000.
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) is shown below.
(1) Asset (Cash) increases by $25,000; Owner's Equity (Gates Deeter, Capital) increases
by $25,000.

Respuesta :

TomShelby

Answer

(1) Asset (Cash) increases by 25,000;

Owner's Equity (Gates Deeter, Capital) increases by 25,000.

(2) Liaiblities (Accounts Payable) decrease by 3,750

              Assets (Cash ) decrease by 3,750

(3) Assets (Account Receivable ) increase by 22,400

Owner's Equity (Services revenue) increases by 22,400.

(4) Assets (Cash) increase by 11,300

Assets (Account Receivables) decrease by 11,3000

(5)  Owner's Equity (Gates Deeter, Capital) decreases by 6,000.

           Assets (Cash ) decrease by 6,000

Explanation:

Each transacion must have at least two accounts to explain it.

Also we must make sure that the change we made balance

so we should check if Assets = Liab + Equity

with the values, increases and decreases we post.

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