The following transactions occurred during a recent year:Paid wages of $1,425 for the current period.Borrowed $6,700 cash from local bank.Purchased $2,850 of equipment on credit.Earned $570 of sales revenue, collected cash.Received $1,140 of utilities services, on credit.Earned $2,210 of service revenue, on credit.Paid $470 cash on account to a supplier.Incurred $155 of delivery expenses, paid cash.Earned $740 of service revenue, collected half in cash, balance on credit.Collected $270 cash from customers on account.Incurred $640 of advertising costs, paid half in cash, balance on credit. Required:For each of the transactions, complete the table below, indicating the account, amount, and direction of the effect (+ for increase and – for decrease) of each transaction under the accrual basis. Include revenues and expenses as subcategories of shareholders’ equity, as shown for the first transaction, which is provided as an example.

1. Expense increase when debited. 2. Income increase When Credited 3. Assets increase when debited.…

Answered: The following transactions occurred…

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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Question

The following transactions occurred during a recent year:

Paid wages of $1,425 for the current period.
Borrowed $6,700 cash from local bank.
Purchased $2,850 of equipment on credit.
Earned $570 of sales revenue, collected cash.
Received $1,140 of utilities services, on credit.
Earned $2,210 of service revenue, on credit.
Paid $470 cash on account to a supplier.
Incurred $155 of delivery expenses, paid cash.
Earned $740 of service revenue, collected half in cash, balance on credit.
Collected $270 cash from customers on account.
Incurred $640 of advertising costs, paid half in cash, balance on credit.

Required:

For each of the transactions, complete the table below, indicating the account, amount, and direction of the effect (+ for increase and – for decrease) of each transaction under the accrual basis. Include revenues and expenses as subcategories of shareholders’ equity, as shown for the first transaction, which is provided as an example.

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