Changes in individual accounts: Suppose that the Accounts Payable account for Da
ID: 2329265 • Letter: C
Question
Changes in individual accounts: Suppose that the Accounts Payable account for DaleksRUs has a beginning balance of $3,500 on July 1t, 2018. During the month of July 2018, RaleksRUs purchased inventory for $800 on account from suppliers. The ending balance of Accounts Payable on July 31st, 2018 was $2,700. Assuming there were no other transactions, how much did DaleksRUs pay to creditors in July 2018? ldentify accounts and analyze effect of transactions on accounts: Suppose Honest Joe's auto service identified the following transactions during August 2018 a. b. c. d. e. Provided services to customers on account for $11,000 Purchased equipment worth $5,000 on account. Provided services to customers for $3,500 cash Paid $1,500 cash for August rent on store Received $5,000 cash payment from customers in transactiona For each of the above transactions, 1) describe the net effect (increase, decrease, or no effect) of each transaction on assets, liabilities, and stockholders' equity using the accounting equation, and 2) in parentheses, identify the specific accounts the transaction would affect. I have completed transaction a. for you as an example. HINT: Remember, the accounting equation must always remain in balance! Liabilities Assets Increases $11,000 (Accounts Receivable, A/R Stockholders' Equi Increases $11,000 (service revenue) a. No effect C.Explanation / Answer
Answers
A
Accounts Payable, Beginning bal 1 Jul
$ 3,500.00
B
Inventory purchased on account during July
$ 800.00
C = A+ B
Total
$ 4,300.00
D
Accounts Payable, Ending bal 31 Jul
$ 2,700.00
E = C - D
Cash paid to creditors in Jul 2018 = Answer =
$ 1,600.00
Answer: DalekRUs paid $ 1,600 to its creditors in July 2018
Transaction no.
Assets
Liabilities
Stockholders' Equity
a
Increase
$ 11,000.00
Accounts receivables
Increase
$ 11,000.00
Service Revenue
b
Increase
$ 5,000.00
Equipment
Increase
$ 5,000.00
Accounts Payable
No Effect
c
Increase
$ 3,500.00
Cash
No Effect
Increase
$ 3,500.00
Service Revenue
d
Decrease
$ 1,500.00
Cash
No Effect
Decrease
$ 1,500.00
Expenses - Rent Expense
e
No Effect
No Effect
No Effect
---There will be ‘no effect’ of Transaction ‘e’ on Total Assets because Cash (Asset) will increase by $ 5,000 and Accounts receivables (Asset) will decrease by $ 5,000. Hence, overall there will be no effect on Total Asset Balance.
A
Accounts Payable, Beginning bal 1 Jul
$ 3,500.00
B
Inventory purchased on account during July
$ 800.00
C = A+ B
Total
$ 4,300.00
D
Accounts Payable, Ending bal 31 Jul
$ 2,700.00
E = C - D
Cash paid to creditors in Jul 2018 = Answer =
$ 1,600.00
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