Question

Home Team Corporation recently hired Steve Willits as its bookkeeper. Mr. Willits is somewhat inexperienced and has made numerous errors recording daily business transactions. Indicate the effects of the errors described as follows on each of the financial statement elements shown in the column headings. Use the following symbols: O for overstated, U for understated, and NE for no effect.
Error Net Income Total Assets Total Owners'
Liabilties Equity
Recorded the issuance of capital stock by
debiting Capital Stock and crediting Cash.
Recorded the declaration and payment of
a dividend by debiting Interest Expense
and crediting Cash.
Recorded the payment of an account
payable by debiting Cash and crediting
Service Revenue.
Recorded the collection of an outstanding
account receivable by debiting Cash and
crediting Accounts Payable.
Recorded client billings on account by
debiting Service Revenue and crediting Cash.
Recorded the cash purchase of land by
debiting Cash and crediting Land.
Recorded the purchase of a building on account
by debiting Rent Expense and crediting Capital Stock.

Answer 1

Answer:

Recorded the issuance of capital stock by  debiting Capital Stock and crediting Cash.

Net Income          Total Assets      Total Liabilities       Owners'  Equity

  NE                             U                         NE                            U

Recorded the declaration and payment of  a dividend by debiting Interest Expense  and crediting Cash.

Net Income          Total Assets      Total Liabilities       Owners'  Equity

    U                             NE                        NE                            U

Recorded the payment of an account  payable by debiting Cash and crediting  Service Revenue.

Net Income          Total Assets      Total Liabilities       Owners'  Equity

    O                             O                          O                              O

Recorded the collection of an outstanding  account receivable by debiting Cash and  crediting Accounts Payable.

Net Income          Total Assets      Total Liabilities       Owners'  Equity

    NE                            O                          O                              NE

Recorded client billings on account by  debiting Service Revenue and crediting Cash.

Net Income          Total Assets      Total Liabilities       Owners'  Equity

    U                             U                          NE                             U

Recorded the cash purchase of land by  debiting Cash and crediting Land.

Net Income          Total Assets      Total Liabilities       Owners'  Equity

    NE                            NE                          NE                              NE

Recorded the purchase of a building on account  by debiting Rent Expense and crediting Capital Stock.

Net Income          Total Assets      Total Liabilities       Owners'  Equity

    U                             U                          U                              NE