Question

Pizza Express Inc. began the Year 2 accounting period with $2,500 cash, $1,400 of common stock, and $1,100 of retained earnings. Pizza Express was affected by the following accounting events during Year 2:
a. Purchased $3,600 of supplies on account.
b. Earned and collected $12,300 of cash revenue.
c. Paid $2,700 cash on accounts payable.
d. Adjusted the records to reflect the use of supplies. A physical count indicated that $250 of supplies was still on hand on December 31, Year 2.

Required:
Show the effects of the events on the financial statements.

Answer 1

Answer:

Part a

Assets = Increase  $3,600

Liabilities = Increase $3,600

Equity = No effect

Part b

Assets = Increase $12,300

Liabilities = No effect

Equity = Increase $12,300

Part c

Assets = Decrease $2,700

Liabilities = Decrease $2,700

Equity = No effect

Part d

Assets = Decrease (with decrease)

Liabilities = No effect

Equity = Decrease (with decrease)

Explanation:

Effects of the events on the financial statements are considered for the impart of transaction on the Assets, Liabilities and Equity as above.