Analyze the Following Transactions in Terms of Their Effect on the Basic

question 120

Essay

Analyze the following transactions in terms of their effect on the basic accounting equation. Record each transaction by increasing (+) or decreasing (-) the dollar amount of each item affected. Indicate the new balance of each item after a transaction is recorded.
(1) Issued stock to investors for $20,000 in cash.
(2) Purchased supplies on credit for $700.
(3) Billed customers $1,000 for services provided.
(4) Paid for supplies purchased in transaction 2.
(5) Paid dividends of $300 cash to stockholders.
(6) Received half from customers billed in transaction 3.
(7) Received and paid utility bill for $100.

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Definitions:

Innocently

Without guilt, harm, or malice; in a manner free from wrongdoing or deception.

Induce

To lead or move by persuasion or influence, often to do something.

Rescission

The act of canceling or invalidating a contract, returning all parties to their state prior to the contract.

Award

A formal acknowledgment, often involving a monetary gift, given in recognition of an achievement or as a decision in arbitration and legal matters.