5. Explain how the accounting equation and the double-entry system of accountingwould be used to record the following transactions:A company purchases inventory on account for $10,000.A company sells goods on account for $20,000.A company collects cash on account from a customer for $5,000.A company pays cash for salaries of $1,000.Required:a. For each transaction, identify the accounts that would be affected and whetherthey would be increased or decreased.b. Write the double-entry journal entry for each transaction.

Answer:Accounting Equation:ParticularsAssets=Liabilities+Owner's Fund Inventory+Debtors+Cash=Sundry…

Answered: a. For each transaction, identify the…

a. For each transaction, identify the accounts that would be affected and whether they would be increased or decreased. b. Write the double-entry journal entry for each transaction.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Bookkeeping

Bookkeeping is the process of recording the financial transactions of a company on a regular basis. With the process of bookkeeping, companies can track important financial information that helps management in making crucial decisions.

Question

5. Explain how the accounting equation and the double-entry system of accounting
would be used to record the following transactions:
A company purchases inventory on account for $10,000.
A company sells goods on account for $20,000.
A company collects cash on account from a customer for $5,000.
A company pays cash for salaries of $1,000.
Required:
a. For each transaction, identify the accounts that would be affected and whether
they would be increased or decreased.
b. Write the double-entry journal entry for each transaction.

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