Indicate the amount of each transaction on total assets, total liability, and to
ID: 2492347 • Letter: I
Question
Indicate the amount of each transaction on total assets, total liability, and total stockholder's equity, and then compute the new totals for each category. The first transaction is provided as an illustration (Negative amounts should be indicated by a minus sign.) How much were total revenues and total expenses during August? What was the amount of net income (or loss) during August? What were the net charges during the month of August in total assets, total liability, and total stockholder's equity? Which of the following statement is true? Revenues decrease Stay-Ann Kelly's equity, and expenses and dividends increased it Interest a "cost" of doing business. Dividend is a "cost" of doing business Cash balance will be affected while paying off an accounts payable and collecting an accounts receivable. When money is borrowed from the bank, the total assets and the total liability will increase.Explanation / Answer
a) Note No. Particulars Assets = Liabilities + Equity August 1, 2013 Totals 358000 281000 77000 August 3, Borrowed $15000 in cash from the bank 15000 15000 New Totals 373000 296000 77000 August 7, bought merchandise inventory valued at $16000 on account 16000 16000 0 New Totals 389000 312000 77000 August 10, paid $8000 cash for operating expenses -8000 0 -8000 New Totals 381000 312000 69000 August 15, Received $55000 in cash from sales of merchandise that had cost $36300 -36300 -36300 55000 55000 New Totals 399700 312000 87700 August 17, paid $12000 owed on accounts payable -12000 -12000 0 New Totals 387700 300000 87700 1 August 21, collected $21000 of accounts receivable 0 0 0 New Totals 387700 300000 87700 August 24, repaid $10000 to bank, plus $200 interest -10200 -10000 -200 New Totals 377500 290000 87500 August 29, paid Stacy-Ann Kelly a cash dividend of $3500 -3500 0 -3500 August 31, 2013 Totals 374000 290000 84000 Notes 1 Accounts receivable decreases by 21000 and cash increases by 21000 hence no effect on assets b.1) Total Revenue During august = $55000 , Total Expenses During August = $16000+$8000+$200 = $24200 b.2) Amount of Income/(Loss) = Total Revenue - Total Expenses = $55000 - $24200 =$30800 c) Net Change Assets Increased by $16000 Liabilities Increased by $9000 Equity Increased by $7000 d) Statement 2nd, 4th and 5th are true.