Transactions Interstate Delivery Service is owned and operated by Katie Wyer. Th

Question

Transactions Interstate Delivery Service is owned and operated by Katie Wyer. The following selected transactions were completed by Interstate Delivery Service during May: Select the accounting equation elements (Assets, Liabilities, Owner's Equity) affected by the transaction. Then, in the "Direction" column, select the impact ("Increases" or "Decreases") on the accounting equation element. Lastly, select the specific account within the accounting equation element that is affected. To illustrate, the answer to (1) follows: (1) Asset (Cash) increases by $18,000; Owner's Equity (Katie Wyer, Capital) increases by $18,000. Element Direction Item 1. Received cash from owner as additional investment, $18,000. Asset Owner's Equity Increases Increases Cash Katie Wyer, Capital 2. Paid advertising expense, $4,850. Liability Increases Katie Wyer, Capital 3. Purchased supplies on account, $2,100. Liability Decreases Accounts Receivable 4. Billed customers for delivery services on account, $14,700. Liability Increases Accounts Payable Liability Decreases Delivery Service Fees 5. Received cash from customers on account, $8,200. Asset Increases Cash Asset Increases Accounts Receivable

Explanation / Answer

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Transaction Transaction Accounting equation element Direction Account 1 Received cash from owner as additional investment $18,000 Asset and Equity Cash increases Equity increases Cash and Wyer capital 2 Paid advertising expenses $4,850 Asset and equity Cash decreases Equity decreases Cash and equity 3 Purchase supplies on account $2,100 Asset and Liability Asset increases Liability increases Supplies and Accounts payable 4 Billed customers for delivery services on account $14,700 Asset and Equity Asset increases Equity increases Accounts receivable and equity 5 Received cash from customers on account $8,200 Asset and Asset Cash increases and accounts receivable decreases Cash and accounts receivable

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