1. Received cash from owner as additional investment, $40,000.
2. Billed customers for delivery services on account, $13,750.
3. Paid creditors on account, $2,500.
4. Received cash from customers on account, $9,000.
5. Paid cash to owner for personal use, $1,000.
Indicate the effect of each transaction on the accounting equation elements (Assets, Liabilities, Owner’s Equity, Drawing, Revenue, and Expense). Also indicate the specific item within the accounting equation element that is affected. To illustrate, the answer to (1) follows:
(1) Asset (Cash) increases by $40,000; Owner’s Equity ( Jerome Foley, Capital) increases by $40,000.
Answer:
(2)
Asset (Accounts Receivable) increases by $13,750;
Revenue (Delivery Service Fees) increases by $13,750.
(3)
Liability (Accounts Payable) decreases by $2,500; Asset (Cash) decreases by $2,500.
(4)
Asset (Cash) increases by $9,000;
Asset (Accounts Receivable) decreases by $9,000.
(5)
Asset (Cash) decreases by $1,000;
Owner's Equity (Jerome Foley, Drawing) decreases by $1,000.