Chapter 1, Problem 12SE

Transaction analysis (Learning Objective 5) 5-10 min.

Action Powersports, Inc., a corporation, sells and services personal watercraft. The business experienced the following events. State whether each event (a) increased, (b) decreased, or (c) had no effect on the total assets of the business, and identify the asset(s) involved in each transaction.

1. 1. Sold additional stock to stockholders
2. 2. Paid cash to purchase land as a building site
3. 3. Paid cash on accounts payable
4. 4. Purchased machinery and equipment; signed a 2-year note payable
5. 5. Performed service for a customer on account
6. 6. Paid cash to the stockholders as a distribution of earnings
7. 7. Received cash from a customer on account
8. 8. Sold land for a price equal to the cost of the land; received cash
9. 9. Borrowed money from the bank