Answer:
(a) + Cash Increase in Assets $16,000 = Liabilities No effect + Stockholders Equity $16,000
(b) + Bank Account Increase in Assets $13,000 = + Borrowings Increase in Liabilities $13,000, No effect on Stockholder's Equity
(c) + Equipment Increase in Asset $1,400 = + Accounts Payable Increase in Liability $1,400, No effect on Stockholder's Equity.
(d) Increase in Assets $21,800 = Increase in Liability $21,800
(e) Increase in Assets $6,800 = Increase in Liability $6,800
Explanation:
(a) Received $16,000 cash from owners and issued stock to them.
Cash received shall increase the cash account in assets by the same i.e. $16,000.
At the same time stock is issued thus, common equity will increase, i.e. Increase in Stockholder's Equity by $16,000
(b) Borrowed $13,000 cash from a bank and signed a note due later this year.
This will increase funds in form of cash and bank balance, basically bank account, i.e. Increase in Asset by $13,000.
This will equally increase as a current liability in the form of notes payable, i.e. increase in liabilities by $13,000.
(c) Bought and received $1,400 of equipment on account.
Since equipment is bought it will increase equipment by $1,400, i.e. an increase in asset.
Also it is bought on account. Thus, liability in accounts payable shall increase by the same $1,400.
(d) Purchased land for $24,000; paid $2,200 in cash and signed a long-term note for $21,800.
This will increase land by $24,000, and decrease cash by $2,200. This will have net impact of increase in assets of $21,800.
Further there is increase in liability of $21,800 which is long term in nature.
(e) Purchased $9,000 of equipment; paid $2,200 in cash and charged the rest on account.
Since equipment is purchased, it will increase equipment account and will decrease cash, on a net effect assets will increase by $9,000 - $2,200 = $6,800.
further liabilities in the form of account payable will increase, by $6,800.
