All of the remaining accounts are listed below. Calculate the balance in each. 7

Question

All of the remaining accounts are listed below. Calculate the balance in each. 7. Consider the current asset accounts (Cash, Accounts Receivable, and Inventory) individually and as a group. What impact will the following transactions have on each account and current assets in total (Increase, Decrease, No Change)? a. The purchase of a fixed asset for cash b. The purchase of a fixed asset on credit c. The purchase of inventory for cash d. The purchase of inventory on credit e. Customer payment of an account receivable f. Writing off a customer's bad debt (assume the allowance process is in place) g. The sale of a fixed asset for cash h. The sale of inventory (at a profit) for cash i. The sale of inventory (at a loss) for cash j. The sale of inventory (at a profit) on credit

Explanation / Answer

a)Purchase of a fixed asset for cash

Cash would decrease (CA will decrease) and fixed asset will increase

b) Purchase of fixed asset oon credit

Current Assets remain same fixed asset increase and credit increase on liabilities side

c Purchase of inventory for cash

Cash decrease and inventory increases by same amount hence no chage in CA

d) Purchase of Invesntory on credit

Invenstory in crease hence the current assets and on credit side liabilities increase

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