Bridgeport Delivery Service is owned and operated by Jerome Foley. The following selected transactions were completed by Bridgeport Delivery Service during February:1. Received cash from owner as additional investment, $40,000.2. Billed customers for delivery services on account, $13,750.3. Paid creditors on account, $2,500.4. Received cash from customers on account, $9,000.5. Paid cash to owner for personal use, $1,000. Indicate the effect of each transaction on the accounting equation elements (Assets, Liabilities, Owner's Equity, Drawing, Revenue, and Expense). Also indicate the specific item within the accounting equation element that is affected. To illustrate, the answer to (1) follows: (1) Asset (Cash) increases by $40,000; Owner's Equity (Jerome Foley, Capital) increases by $40,000.

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Business

Devon Livingston

24 August, 06:47

Bridgeport Delivery Service is owned and operated by Jerome Foley. The following selected transactions were completed by Bridgeport Delivery Service during February:1. Received cash from owner as additional investment, $40,000.2. Billed customers for delivery services on account, $13,750.3. Paid creditors on account, $2,500.4. Received cash from customers on account, $9,000.5. Paid cash to owner for personal use, $1,000. Indicate the effect of each transaction on the accounting equation elements (Assets, Liabilities, Owner's Equity, Drawing, Revenue, and Expense). Also indicate the specific item within the accounting equation element that is affected. To illustrate, the answer to (1) follows: (1) Asset (Cash) increases by $40,000; Owner's Equity (Jerome Foley, Capital) increases by $40,000.

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Landon Chang · Answer 1

1) Assets (Cash) increases by $ 40,000. Owners' Equity (Jerome Foley Capital) increase by $ 40,000

2) Assets (Account Receivables) increases by $13.750. Revenues (Delivery Services Revenue) increases by $13,750

3) Liabilities (Account Payables) decreases by $2,500. Asset (Cash) decreases by $2,500

4) Assets (Cash) increases by $ 9000. Assets (Receivables) decreases by $ 9,000

5) Drawings (Jerome Foley Drawings) increases by $ 1,000. Asset (Cash) decreases by $ 1,000.

Explanation:

1. An additional investment by the owner in cash results in an increase in cash and a corresponding increase in the owners' equity.

2. Any billing for delivery services is a revenue to the organization and should increase the revenue account. Since it is on credit the corresponding asset being increased is accounts receivable (asset)

3. Payments for liabilities results in a reduction of accounts payables (liabilities) The asset (Cash) is being reduced on the assumption that the payment is being reduced.

4. Cash received results in a decrease in one asset i. e Receivables and increases another asset (Cash)

5. Owners drawings for personal use are debited to Drawings account and results in a reduction in assets.

Finley Greene · Answer 2

2. Assets increase by #13,750.

3. Assets decrease by $2,500; liabilities decrease by $2,500.

4. Assets increase by $9,000.

5. Assets decrease by $1000; owners equity decrease by $1000

Explanation:

2. Billing costomers for delivery services increases the amount of assets as the accounts received are gonna increase by $13,750 and delivery services also increases the revenue by $13,750.

3. Assets decrease by $2,500; liabilities decrease by $2,500.

4. cash receipts increase the Assets by $9,000 and the accounts receivable decrease by $9,000.

5. cash payments causes Assets to decrease by $1000 and owners equity decrease by $1000