Question

Below is a list of activities for Purple Cow Incorporated. Required: For each activity, indicate the impact on the accounting equation. After doing so for all transactions, ensure that the accounting equation remains in balance. The first item is provided as an example. (Decreases to account classifications should be entered as a negative.)
Transaction

Assets

=

Liabilities

+

Stockholders' Equity

1.

Provide services to customers on account, $1,600.

$1,600

$0

$1,600

2.

Pay $400 for current month's rent.

3.

Hire a new employee, who will be paid $500 at the end of each month.

4.

Pay $100 for advertising aired in the current period.

5.

Purchase office supplies for $400 cash.

6.

Receive cash of $1,000 from customers in (1) above.

7.

Obtain a loan from the bank for $7,000.

8.

Receive a bill of $200 for utility costs in the current period.

9.

Issue common stock for $10,000 cash.

10.

Pay $500 to employee in (3) above.

Totals

Answer 1

Answer:

             Assets        =           Liabilities         +       Stockholders' Equity

1.             1,600                            0                                  1600

2.             -400                            0                                  -400

3.                  0                             0                                        0

4.             -100                             0                                   -100

5.            -400                             0                                  -400  

6.            1000                             0                                       0

              -1000

7.             7000                     7000                                       0  

8.                   0                       200                                  -200

9.           10000                           0                                10000

10.            -500                          0                                  -500    

Totals     17200                     7200                                10000