Accounting Equation effect
CaidenEZ Curb Company completed the following transactions during 2010. The annual accounting period ends December 31, 2010. |
| Jan. 8 | Purchased merchandise on account at a cost of $14,000. (Assume a perpetual inventory system.) |
| 17 | Paid for the January 8 purchase. |
| Apr. 1 | Received $40,000 from National Bank after signing a 12-month, 6 percent, promissory note. |
| June 3 | Purchased merchandise on account at a cost of $18,000. |
| July 5 | Paid for the June 3 purchase. |
| Aug. 1 | Rented out a small office in a building owned by EZ Curb Company and collected six months' rent in advance amounting to $6,000. (Use an account called Unearned Rent Revenue.) |
| Dec. 20 | Received a $100 deposit from a customer as a guarantee to return a large trailer "borrowed" for 30 days. |
(TIP: Consider whether EZ Curb Company has an obligation to return the money when the trailer is returned.) | |
| Dec. 31 | Determined that wages of $6,500 were earned but not yet paid on December 31 (ignore payroll taxes). |
| Dec. 31 | Adjusted the accounts at year-end, relating to interest. |
| Dec. 31 | Adjusted the accounts at year-end, relating to rent. |
| Requirement 1: | ||
For each listed transaction and related adjusting entry, indicate the accounts, amounts, and effects ( + for increase, ' for decrease, and NE for no effect) on the accounting equation
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11 years ago
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