Question

Ford Corporation sells craft supplies and has provided several transactions below. Identify the effect on the...

  1. Ford Corporation sells craft supplies and has provided several transactions below. Identify the effect on the accounting equation of each transaction by selecting from answers A through G. Print the letter of the correct effect in the answer space provided. You may use each letter more than once or not at all.

Accounting Equation Effects

A. Increase Assets and Increase Liabilities

B. Increase Assets and Increase Retained Earnings

C. Increase Assets and Increase Common Stock

D. Decrease Assets and Decrease Liabilities

E. Decrease Assets and Decrease Retained Earnings

F. Decrease Assets and Decrease Common Stock

G. Increase Assets and Decrease Assets

Answers

Transactions

Purchased frames for cash

Received cash by borrowing from the bank

Purchased building and land in exchange for a note payable

Received cash from investors in exchange for the issuance of common stock

Paid salaries for the current month

Sold frames to customers for cash

Paid a portion of the principal borrowed on a bank loan

Paid dividends to shareholders
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Homework Answers

Answer #1
Answers Transactions Explanations
G Purchased frames for cash Increase in inventory and decrease in Cash
A Received cash by borrowing from the bank Increase in Cash and Borrowings
A Purchased building and land in exchange for a note payable Increase in Building and Note payable
C Received cash from investors in exchange for the issuance of common stock Increase in cash and Common stock
E Paid salaries for the current month Decrease in cash and decrease in net income
G Sold frames to customers for cash Decrease in inventory and increase Cash
D Paid a portion of the principal borrowed on a bank loan Decrease in cash and decrease in borrowings
E Paid dividends to shareholders Decrease in dividends and cash

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