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16 September, 19:05

The following transactions were completed by the company.

a. The company completed consulting work for a client and immediately collected $6,000 cash earned.

b. The company completed commission work for a client and sent a bill for $4,500 to be received within 30 days.

c. The company paid an assistant $1,650 cash as wages for the period.

d. The company collected $2,250 cash as a partial payment for the amount owed by the client in transaction b.

e. The company paid $800 cash for this period's cleaning services.

Prepare the impact of each transaction on individual items of accounting equation.

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Answers (1)
  1. 16 September, 19:51
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    a.

    Assets : Increase by $6,000

    Liabilities : No effect

    Equity : Increase by $6,000

    b.

    Assets : Increase by $4,500

    Liabilities : No effect

    Equity: Increase by $4,500

    c.

    Assets : Decrease $1,650

    Liabilities : No effect

    Equity : Decrease $1,650

    d.

    Assets : Increase $2,250, Decrease $2,250

    Liabilities; No effect

    Equity: No effect

    e.

    Assets : Decrease $800

    Liabilities : No effect

    Equity : Decrease $800

    Explanation:

    a.

    Recognize Revenue and Assets of Cash

    b.

    Recognize Revenue and Assets in Trade Receivable

    c.

    Recognize an expense and de-recognize the Assets of Cash

    d.

    Recognize Assets in Cash and de-recognize Assets in Accounts Receivables.

    e.

    Recognize an Expense and de-recognise the Assets in Cash
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