EX 1-12 Transactions

The following selected transactions were completed by Cota Delivery Service during July:

1. Received cash in exchange for common stock, $35,000.

2. Purchased supplies for cash, $1,100.

3. Paid rent for October, $4,500.

4. Paid advertising expense, $900.

5. Received cash for providing delivery services, $33,000.

6. Billed customers for delivery services on account, $58,000.

7. Paid creditors on account, $2,900.

8. Received cash from customers on account, $27,500.

9. Determined that the cost of supplies on hand was $300 and $8,600 of supplies had been used during the month.

10. Paid cash dividends, $2,500.

Indicate the effect of each transaction on the accounting equation by listing the numbers identifying the transactions, (1) through (10), in a column, and inserting at the right of each number the appropriate letter from the following list:

a. Increase in an asset, decrease in another asset.

b. Increase in an asset, increase in a liability.

c. Increase in an asset, increase in stockholders’ equity.

d. Decrease in an asset, decrease in a liability.

e. Decrease in an asset, decrease in stockholders’ equity.

Answer:

1. c

2. a

3. e

4. e

5. c

6. c 

7. d 

8. a 

9. e 

10. e