For each of the following transactions of Spotlighter, Inc., for the month of Ja

Question

For each of the following transactions of Spotlighter, Inc., for the month of January, indicate the accounts, amounts, and direction of the effects on the accounting equation. A sample is provided. (Enter any decreases to account balances with a minus sign.) a. (Sample) Borrowed $4,640 from a local bank on a note due in six months. b. Received $5,330 cash from investors and issued common stock to them. c. Purchased $1,700 in equipment, paying $550 cash and promising the rest on a note due in one year. d. Paid $650 cash for supplies. e. Bought and received $1,050 of supplies on account.

Explanation / Answer

Borrowed from bank 4,640

Accounts cash 4,640

Notes payable 4,640

Asset Cash increase = notes payable liability increase

2)Cash $5,330

Common stock 5,330

Asset cash increase = increase stockholder’s equity

3)Equipment    1,700

Cash 550

Note payable 1150

Increase asset equipment 1,700 – decrease asset cash 550 = increase in liability notes payable

4)Supplies 650

Cash 650

Increase supplies 650 and decrease cash 650 ( both assets)

5)supplies 1050

Accounts payable 1,050

Increase supplies asset = increase liability accounts payable

Borrowed from bank 4,640

Accounts cash 4,640

Notes payable 4,640

Asset Cash increase = notes payable liability increase

2)Cash $5,330

Common stock 5,330

Asset cash increase = increase stockholder’s equity

3)Equipment    1,700

Cash 550

Note payable 1150

Increase asset equipment 1,700 – decrease asset cash 550 = increase in liability notes payable

4)Supplies 650

Cash 650

Increase supplies 650 and decrease cash 650 ( both assets)

5)supplies 1050

Accounts payable 1,050

Increase supplies asset = increase liability accounts payable

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