Exercise 2-7 Leppard Enterprises had the following selected transactions. 1. 2.

Question

Exercise 2-7 Leppard Enterprises had the following selected transactions. 1. 2. 3. 4. Kim Leppard invested $7,407 cash in the business in exchange for common stock. Paid office rent of $1,407. Performed consulting services and billed a client $6,963 Declared and paid a $889 cash dividend. (a) Indicate the effect each transaction has on the accounting equation (Assets LiabilitiesStockholders Equity), using plus and minus signs. Assets - Liabilities + Stockholders' Equit (b) Journalize each transaction. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation Debit Credit (Issue stock) 2. (Expense) (Dividends)

Explanation / Answer

Answer to Part A Assets = Liabilities + Stock holders Equity 1 + = + 2 - = - 3 + = + 4 - = - Answer to Part B No Accounting title and explanation Debit Credit 1 Cash 7407 Common Stock 7407 (Issue Stock) 2 Rent Expense 1407 Cash 1407 (expense) 3 Accounts receivable 6963 Consulting revenue 6963 (Revenue) 4 Retained earnings 889 Cash 889 (Dividends)

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