Vera Company experienced the following events during its first year of operation

Question

Vera Company experienced the following events during its first year of operations.

1. Acquired $16,000 cash from the issue of common stock.
2. Paid $3,500 cash for salary expenses.
3. Borrowed $10,000 cash from New South Bank.
4. Paid $6,000 cash to purchase land.
5. Provided boarding services for $10,500 cash.
6. Acquired an additional $1,000 cash from the issue of common stock.
7. Paid $2,400 cash for utilities expense.
8. Paid a $1,500 cash dividend to the stockholders.
9. Provided additional services for $6,000 cash.
10. Purchased additional land for $2,500 cash.
11. The market value of the land was determined to be $24,000 at the end of the accounting period.

Required:

Classify each event as an asset source, use, or exchange transaction. IF not applicaple say N/A

Explanation / Answer

# Asset Source Transactions result in an increase in an asset account and an increase in a claims account. Examples include acquiring cash from owners, borrowing money from a bank, earning cash revenue or revenue on account, and purchasing inventory, supplies, or other assets on account. # Asset Use Transactions result in a decrease in an asset account and a decrease in a claims account. Examples include paying cash dividends to owners, paying off debt, recognizing depreciation expense, paying cash expenses, and writing down assets to market value. # Asset Exchange Transactions result in a decrease in one asset account and an increase in another asset account. Examples include the cash purchase of inventory, supplies, or other assets, the collection of accounts receivable, and trading physical assets such as a truck for a car. Assset Source: 1. Acquired $16,000 cash from the issue of common stock. 6. Acquired an additional $1,000 cash from the issue of common stock. N/A 3. Borrowed $10,000 cash from New South Bank. 10. Purchased additional land for $2,500 cash. Use: 2. Paid $3,500 cash for salary expenses. 4. Paid $6,000 cash to purchase land. 7. Paid $2,400 cash for utilities expense. 8. Paid a $1,500 cash dividend to the stockholders. Exchange : 5. Provided boarding services for $10,500 cash. 9. Provided additional services for $6,000 cash. N/A 11. The market value of the land was determined to be $24,000 at the end of the accounting period.

Related Questions

Navigate

• Browse (All)
• Browse V
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.