Answer:
Accounts, Amounts, and Effects on the Accounting Equation:
Apr. 30 Assets increase (Cash +$876,000) = Liabilities increase(Promissory note payable (Commercial Bank) +$876,000) + Equity
June 6 Assets increase (Inventory +$98,000) = Liabilities increase (Accounts payable +$98,000) + Equity
July 15 Assets decrease (Cash -$98,000) = Liabilities decrease (Accounts payable -$98,000) + Equity
Aug. 31 Assets increase (Cash +$35,500) = Liabilities increase (Deferred Revenue +$35,500) + Equity
Dec. 31 Assets = Liabilities increase (Salary and wages payable +$63,000) + Equity decrease (Retained earnings (Salary and wages expenses) -$63,000)
Dec. 31 Assets = Liabilities increase (Interest payable +$49,640) + Equity decrease (Retained earnings (Interest Expense) -$49,640)
Dec. 31 Assets = Liabilities decrease (Deferred Revenue -$23,667) + Equity increase (Retained earnings (Security Service Revenue) +$23,667)
Explanation:
a) Data and Analysis:
Apr. 30 Cash $876,000 12-month, 8.50 percent, Promissory note payable (Commercial Bank) $876,000
June 6 Inventory $98,000 Accounts payable $98,000
July 15 Accounts payable $98,000 Cash $98,000
Aug. 31 Cash $35,500 Deferred Revenue $35,500
Dec. 31 Salary and wages expenses $63,000 Salary and wages payable $63,000
Dec. 31 Interest Expense $49,640 Interest payable $49,640 ($876,000 * 8.5% * 8/12)
Dec. 31 Deferred Revenue $23,667 Security Service Revenue $23,667
