Analyzing Transactions

Analyze the following transactions to determine which accounts are involved, whether they will be increased or decreased, and in which account group they belong. Use the expanded accounting equation: A = L + C - D + R - E. Use a (+) for increase and a (-) for decrease. The revenue account to use is Fees Earned.

Example: The owner invested in his business.
+ Assets (Cash)+ Capital (Owner's Equity)
1. Bought new equipment for cash.
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2. Received cash for services rendered.
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3. The business performed services on account.
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4. Withdrew cash for personal use.
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5. Paid secretary's salary..
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6. Paid for supplies purchased.
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7. Billed customers for services rendered.
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8. Received payment from a customer paying on his account.
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9. The supplies were used up. Record them as an expense now.
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10. Borrowed money from the bank.
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11. Purchased on account (charged) some office equipment.
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12. Paid for utilities expense.
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13. Paid the bank the money we previously borrowed.
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14. Paid the telephone bill that just came in.
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15. Made a partial payment to a creditor.
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16. Took cash out of the business to pay for a personal bill.
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17. Recorded revenue earned, but not collected yet.
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18. Recorded expenses incurred, but not collected yet.
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19. Received cash for the return of some equipment that was defective.
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20. Received payment from an Account Receivable.
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21. Made payment to an Account Payable.
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Answers

Analyze the following transactions to determine which accounts are involved, whether they will be increased or decreased, and in which account group they belong. Use the expanded accounting equation: A = L + C - D + R - E. Use a (+) for increase and a (-) for decrease. The revenue account to use is Fees Earned.

Example: The owner invested in his business.
+ Assets (Cash)+ Capital (Owner's Equity)
1. Bought new equipment for cash.
+ Assets (Equipment)- Asset (Cash)
2. Received cash for services rendered.
+ Asset (Cash)+ Revenue (Fees Earned)
3. The business performed services on account.
+ Asset (Accounts Receivable)+ Revenue (Fees Earned)
4. Withdrew cash for personal use.
+ Drawing (Withdrawals)- Asset (Cash)
5. Paid secretary's salary..
+ Expense (Salaries Expense)- Asset (Cash)
6. Paid for supplies purchased.
+ Asset (Supplies)- Asset (Cash)
7. Billed customers for services rendered.
+ Asset (Accounts Receivable)+ Revenue (Fees Earned)
8. Received payment from a customer paying on his account.
+ Asset (Cash)- Asset (Accounts Receivable)
9. The supplies were used up. Record them as an expense now.
+ Expense (Supplies Expense)- Asset (Supplies)
10. Borrowed money from the bank.
+ Asset (Cash)+ Liability (Notes Payable)
11. Purchased on account (charged) some office equipment.
+ Asset (Office Equipment)+ Liability (Accounts Payable)
12. Paid for utilities expense.
+ Expense (Utilities Expense)- Asset (Cash)
13. Paid the bank the money we previously borrowed.
- Liability (Notes Payable)- Asset (Cash)
14. Paid the telephone bill that just came in.
+ Expense (Telephone Expense)- Asset (Cash)
15. Made a partial payment to a creditor.
- Liability (Accounts Payable)- Asset (Cash)
16. Took cash out of the business to pay for a personal bill.
+ Drawing (Withdrawals)- Asset (Cash)
17. Recorded revenue earned, but not collected yet.
+ Asset (Accounts Receivable)+ Revenue (Fees Earned)
18. Recorded advertising expenses incurred, but not paid yet.
+ Expense (Advertising Expense)+ Liability (Accounts Payable)
19. Received cash for the return of some equipment that was defective.
+ Asset (Cash)- Asset (Equipment)
20. Received payment from an Account Receivable.
+ Asset (Cash)- Asset (Accounts Receivable)
21. Made payment to an Account Payable.
- Liability (Accounts Payable)- Asset (Cash)