Interstate Delivery Service is owned and operated by Katie Wyer. The following selected transactions were completed by Interstate Delivery Service during May:
1. Received cash from owner as additional investment, $18,000.
2. Paid advertising expense, $4,850.
3. Purchased supplies on account, $2,100.
4. Billed customers for delivery services on account, $14,700.
5. Received cash from customers on account, $8,200.
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 $18,000; Owner’s Equity (Katie Wyer, Capital) increases by $18,000.
Answer:
(2)
Expense (Advertising Expense) increases by $4,850;
Asset (Cash) decreases by $4,850.
(3)
Asset (Supplies) increases by $2,100;
Liability (Accounts Payable) increases by $2,100.
(4)
Asset (Accounts Receivable) increases by $14,700;
Revenue (Delivery Service Fees) increases by $14,700.
(5)
Asset (Cash) increases by $8,200;
Asset (Accounts Receivable) decreases by $8,200.