below is a list of activities for purple cow incorporated For each activity, ind

Question

below is a list of activities for purple cow incorporated For each activity, indicate the impact on the accounting equation. After doing so for all transactions, ensure that the accounting eq account classificatlons should be entered as a negative) Transaction Llabilities Stoc to customers on account, $1,640. S1,640 $1,640 (380)(380) 2. Pay $380 for current month's rent. 3.Hire a new employee, who will be paid $540 at the end of each month 4. Pay $100 for advertising aired in the current period. 5.Purchase office supplies for $380 cash. 6. Receive cash of 8. Receive a bill of $530 for utility costs in the current period. 9. Issue common stock for $10,400 cash. 10 Pay $540 to employee in (3) above. Totals

Explanation / Answer

Explanations

Ponint no 3 = Hiring an employee is non monetary or non financial cost hence it wont be recorded in books of accounts.

point no 5 = office supplies are recorded as asset.Hence effectof decrease in cash and increase in office supply is shown by add and dedcuting the same amount in assets.( alternatively is can also be shown as expense by deducting from stockholders equity)

Transactions Assets = Liabilities + Stockholders Equity 1 Provide service to customers on account (1640) 1640 0 1640 2 Pay 380$ for current month rent (380) 0 (380) 3 Hire a new employee 0 0 0 4 Pay 100$ for advertising (100) 0 (100) 5 Purchase office supplies for 380$ cash (380) 0 0 380 6 Recieve cash from customer (1040) 0 0 1040 7 Loan from bank (7400$) 7400 7400 0 8 Bill of 530 for utility cost 0 530 (530) 9 Issued common stock 10400 cash 10400 0 10400 10 Pay 540 to employee (540) 0 (540) Total 18420 = 7930 + 10490

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