The Effect of Transactions Practice Problem - ACCT 2050, University of Minnesota--Twin Cities

16. The Effect of Transactions

in Topic 4 (Problem 16 of 18)

Hard

For each transaction listed, determine the effect on the February financial statements. Indicate + for increase, or – for decrease. Leave the cell blank if there is no effect.

		Balance Sheet			Income Statement
	Transaction	Assets	Liabilities	SHE	Revenue	Expenses	Net Income
1	Paid wages earned in January	—	—
2	Prepaid rent expired	—		—		+	—
3	Performed service which customer had paid for in January		—	+	+		+
4	Collected on credit sales made in Jan.
5	Depreciation on equipment was recorded	—		—		+	—
6	Hired a new manager and signed a contract to pay her $60,000 per year.
7	Dividends were declared an immediately paid	—		—
8	Purchased shares of another company’s stock for cash
9	Performed a service for a customer, collected three fourths in cash and balance on account.	+		+	+		+
10	Purchased a patent, paying cash
11	Incurred expenses, paid four-fifths in cash and put the balance on account	—	+	—		+	—