Question

The Lerxst Company records these journal entries:

Depreciation	$75
Accrued Expense	$18
Earned portion of Unearned Revenue	$95
Dividends declared but not paid	$25

Indicate the net effect of these journal entries on the following items. Indicate the dollar amount of the effect and the direction of the effect. (Example: $13 Increase, or $8 Decrease, or No Effect.)

1. Net Income
2. Total Assets
3. Total Liabilities
4. Retained Earnings
5. Total Equity
6. Working Capital

Answer 1

			Net Income	Total	Total	Retained	Total	Working
				Assets	Liabilities	earnings	Equity	Capital
1. Depreciation		$75 Decrease	$ 75 Decrease	No effect	$75 decrease	$75 Decrease	No effect
2. Accrued expense		$ 18 Decrease	No effect	$18 Increase	$ 18 Decrease	$ 18 Decrease	$ 18 Decrease
3. Earned portion of unearned revenue	$95 Increase	No effect	$95 decrease	$95 Increase	$95 Increase	$95 Increase
4. Dividend declared not paid	No effect	No effect	$25 increase	$25 decrease	$25 decrease	$25 decrease