Question

The following selected transactions were completed by Silverado Delivery Service during February:1. Received cash from owner as additional investment, $25,000.2. Purchased supplies for cash, $750.3. Paid rent for February, $3,000.4. Paid advertising expense, $1,5005. Received cash for providing delivery services, $16,800.6. Billed customers for delivery services on account, $32,5007. Paid creditors on account, $1,400.8. Received cash from customers on account, $23,770.9. Determined that the cost of supplies on hand was $275 and $475 of supplies had been used during the month.10. Paid cash to owner for personal use, $5,000.Indicate the effect of each transaction on the accounting equation by listing the num- bers identifying the transactions, (1) through (10), in a column and inserting at the right of each number the appropriate letter from the following list:a. Increase in an asset, decrease in another asset.b. Increase in an asset, increase in a liability.c. Increase in an asset, increase in owner's equity.d. Decrease in an asset, decrease in a liabilitye. Decrease in an asset, decrease in owner's equity.

Answer 1

Answer:

Explanation:

1. Received cash from the owner as additional investment, $25,000. - C  

As both sides of the balance sheet would be increased i.e the cash and the owner equity.  

2. Purchased supplies for cash, $750. - A

As supplies are purchased for cash which increases the supplies balance and decreases the cash balance on the other side.

3. Paid rent for February, $3,000. - E

In this transaction, the cash balance is decreased and equity balance is also decreased

4. Paid advertising expense, $1,500 - E

In this transaction, the cash balance is decreased and equity balance is also decreased

5. Received cash for providing delivery services, $16,800. - C

In this transaction, the cash balance is increased and equity balance is also increased

6. Billed customers for delivery services on account, $32,500 - C

In this transaction, the cash balance is increased and equity balance is also increased

7. Paid creditors on account, $1,400 - D

In this transaction, the cash balance is decreased and creditors balance is also decreased

8. Received cash from customers on account, $23,770. - A

In this transaction, the cash balance is increased and account receivable balance is decreased

9. Determined that the cost of supplies on hand was $275 and $475 of supplies had been used during the month. - E

In this transaction, the supplies balance is decreased and equity balance is also decreased (supplies expense)

10. Paid cash to the owner for personal use, $5,000 - E

In this transaction, the cash balance is decreased and equity balance is also decreased (owner capital)