Question

Transactions

Arrowhead Delivery Service is owned and operated by Gates Deeter. The following selected transactions were completed by Arrowhead Delivery Service during August:

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

	Element	Item	Direction
1. Received cash from owner as additional investment, $25,000.	Asset	Cash	Increases
	Owner's Equity	Gates Deeter, Capital	Increases
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.

Answer 1

	Element	Item	Direction
1. Received cash from owner as additional investment, $25,000.	Asset	Cash	Increases
	Owner's Equity	Gates Deeter, Capital	Increases
2. Paid creditors on account, $3,750.	Asset	Cash	decreases
	Liability	Accounts Payable	decreases
3. Billed customers for delivery services on account, $22,400.	Asset	Accounts Receivable	increases
	Revenue	Delivery Service Fees	increases
4. Received cash from customers on account, $11,300.	Asset	Cash	increases
	Asset	Accounts Receivable	decreases
5. Paid cash to owner for personal use, $6,000.	Asset	Cash	decreases
	Asset	Gates Deeter, Drawing	increases