Chapter 1, Problem 1.26E

Using the accounting equation to analyze business transactions

Indicate the effects of the following business transactions on the accounting equation of Vivian’s Online Video store. Transaction (a) is answered as a guide.

1. a. Received cash of $10,000 from issuance of common stock.

   Answer: Increase asset (Cash); Increase equity (Common Stock)

2. b. Earned video rental revenue on account, $2,800.
3. c. Purchased office furniture on account, $300.
4. d. Received cash on account, $400.
5. e. Paid cash on account, $100.
6. f. Rented videos and received cash of $200.
7. g. Paid monthly office rent of $1,000.
8. h. Paid $100 cash to purchase office supplies.