value: 1.00 points Exercise 2-3 Analyze the impact of transactions on the accoun

Question

value: 1.00 points Exercise 2-3 Analyze the impact of transactions on the accounting equation (LO2-2) Green Wave Company plans to own and operate a storage rental facility. Required For the first month of operations, the company had the following transactions. For each transaction, describe the dual effect on the accounting equation. For example, in the first transaction, (1) assets increase and (2) stockholders' equity increases. Transactions Dual Effect 1. Issue 10,000 shares of common stock in exchange for $32,000 in cash. Assets increase and stockholders' equity increases 2. Purchase land for $19,000. A note payable is signed for the full amount. 3. Purchase storage container equipment for $8,000 cash. 4. Hire three employees for $2,000 per month. 5. Receive cash of $12,000 in rental fees for the current month. 6. Purchase office supplies for $2,000 on account. 7. Pay employees $6,000 for the first month's salaries.

Explanation / Answer

As per policy, only one question is allowed to answer at a time, so answering two here :

Ex 2-3) transactions Dual Effect 1 Cash assets increase and Stockholder's equity increases 2 Fixed assets increases and Liabilities increases 3 Cash assets decreases and Fixed assets increases 4 No entry as only agreement and no payment 5 Cash assets increases and Rental Fees revenues increases 6 Supplies assets increases and Payable liabilities increases 7 Salaries expenses increases and Cash assets increases Ex 2-12) E. Transaction: Correct or Incorrect CORRECT ENTRY: Debit $ Credit $ 1 Incorrect Dr. Cash 11000 Cr. Common Stock 11000 2 Correct N/A 3 Incorrect Dr. Supplies 220 Cr. Accounts Payable 220 4 Incorrect Dr. Prepaid Rent 520 Cr. Cash 520 5 Incorrect Dr. Equipment 1800 Cr. Cash 1800

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