The following transactions occu rred during a recent year a

The following transactions occu rred during a recent year a. Paid wages of $1,700 for the current period (example). b. Borrowed $8,500 cash from local bank using a short-term note c. Purchased $3,400 of equipment on credit d. Earned $680 of sales revenue; collected cash e. Received $1,360 of utilities services, on credit f. Earned $2,870 of service revenue, on credit g. Paid $510 cash on account to a supplier h. Incurred $115 of travel expenses; paid cash i. Earned $680 of service revenue, collected half in cash, with balance on credit j. Collected $190 cash from customers on account k. Incurred $480 of advertising costs; paid half in cash, with balance on credit Required 1. For each of the transactions, complete the table below, indicating the account, amount, and direction of the effect for increase and - for decrease) of each transaction under the accrual basis. Include revenues and expenses as subcategories of stockholders\' equity, as shown for the first transaction, which is provided as an example. Also, determine the company\'s preliminary net income. (Enter any decreases to account balances with a minus sign.) Stockholders\' Equity Salaries and Wages Expense (1,700) Assets Liabilities a. Cash (1,700) ages Expense 2. Determine the company\'s preliminary net income Preliminary Net Income

Solution

Assets = Liabilities + Stockholders\' Equity a. Cash         (1,700) Salaries and Wages Expense         (1,700) b. Cash           8,500 Note Payable (short-term)           8,500 c. Equipment           3,400 Accounts Payable           3,400 d. Cash              680 Sales Revenue              680 e. Accounts Payable           1,360 Utilities Expense         (1,360) f. Accounts Receivable           2,870 Service Revenue           2,870 g Cash            (510) Accounts Payable            (510) h. Cash            (115) Travel Expense            (115) i. Cash              340 Accounts Receivable              340 Service Revenue              680 j. Cash              190 Accounts Receivable            (190) k. Cash            (240) Accounts Payable              240 Advertising Expense            (480) Preliminary net income: Service Revenue           2,870 Service Revenue              680 Sales Revenue              680 Total Revenue         4,230 Salaries and Wages Expense         (1,700) Utilities Expense         (1,360) Advertising Expense            (480) Travel Expense            (115) Total Expenses      (3,655) Preliminary net income            575