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15 December, 12:15

Arrowhead Delivery Service is owned and operated by Gates Deeter. The following selected

transactions were completed by Arrowhead Delivery Service during August:

1. Received cash from owner as additional investment, $25,000.

2. Paid creditors on account, $3,750.

3. Billed customers for delivery services on account, $22,400.

4. Received cash from customers on account, $11,300.

5. Paid cash to owner for personal use, $6,000.

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) is shown below.

(1) Asset (Cash) increases by $25,000; Owner's Equity (Gates Deeter, Capital) increases

by $25,000.

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Answers (1)
  1. 15 December, 13:59
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    Answer

    (1) Asset (Cash) increases by 25,000;

    Owner's Equity (Gates Deeter, Capital) increases by 25,000.

    (2) Liaiblities (Accounts Payable) decrease by 3,750

    Assets (Cash) decrease by 3,750

    (3) Assets (Account Receivable) increase by 22,400

    Owner's Equity (Services revenue) increases by 22,400.

    (4) Assets (Cash) increase by 11,300

    Assets (Account Receivables) decrease by 11,3000

    (5) Owner's Equity (Gates Deeter, Capital) decreases by 6,000.

    Assets (Cash) decrease by 6,000

    Explanation:

    Each transacion must have at least two accounts to explain it.

    Also we must make sure that the change we made balance

    so we should check if Assets = Liab + Equity

    with the values, increases and decreases we post.
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