Chapter 1, Problem 1.27E

Using the accounting equation to analyze business transactions

Indicate the effects of the following business transactions on the accounting equation for Sam’s Snack Foods, a supplier of snack foods. Transaction (a) is answered as a guide.

1. a. Sam’s Snack Foods received cash from issuance of common stock to stockholders.

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

2. b. Cash purchase of land for a building site.
3. c. Paid cash on accounts payable.
4. d. Purchased equipment; signed a note payable.
5. e. Performed service for a customer on account.
6. f. Employees worked for the week but will be paid next Tuesday.
7. g. Received cash from a customer on accounts receivable.
8. h. Borrowed money from the bank.
9. i. Cash dividends paid to stockholders.
10. j. Incurred utilities expense on account.