Question

Nevada Company experienced the following events during its first year of operations: Acquired an additional $1,000 cash from the issue of common stock. Paid $2,400 cash for utilities expense. Paid a $1,500 cash dividend to the stockholders. Provided additional services for $6,000 cash. Purchased additional land for $2,500 cash. The market value of the land was determined to be $24,000 at the end of the accounting period. Acquired $16,000 cash from the issue of common stock. Paid $3,500 cash for salary expense. Borrowed $10,000 cash from New South Bank. Paid $6,000 cash to purchase land. Provided boarding services for $10,500 cash. Required Classify each event as an asset source, use, or exchange transaction or as not applicable (NA).

Answer 1

Answer:

Event                                                      Classification

1.                                                              Asset Source

2.                                                             Asset Use

3.                                                             Asset Use

4.                                                             Asset Source

5.                                                             Asset Exchange

6.                                                             Not applicable (NA)

7.                                                              Asset Source

8.                                                              Asset Use

9.                                                              Asset Source

10.                                                             Asset Exchange

11.                                                              Asset Source

Explanation:

An asset is an economic resources controlled by an entity from which future economic benefits are expected.

In recording asset,  business events can result in asset source,asset use and asset exchange. Asset source is the acquisition of asset, asset use is consumption of existing asset and asset exchange is the transfer of asset from one source to another.