Binder Corporation had the following transactions during the

Binder Corporation had the following transactions during the month. Indicate the effect of each transaction on Assets, Liabilities, and Equity. (Put the amount of the change in the blank. Use a negative (-) sign to show a decrease and put a zero if the item was not affected.) A) The Company performs services and receives payment of $3,800 cash. How does this affect the accounting equation? Assets Liabilities Equity B) The Company performs $6,100 of services for a customer and sends the customer a bill. How does this affect the accounting equation? Assets Liabilities Equity C) The Company receives the $6,100 owed from the customer above. How does this affect the accounting equation? Assets Liabilities Equity D) The Company pays $3,400 of wages to its workers. How does this affect the accounting equation? Assets Liabilities Equity E) The Company pays a $900 dividend to its owner. How does this affect the accounting equation? Assets Liabilities Equity

Solution

A.performing services and receiving payment of $3,800 cash.

B.performs services and sends a bill to customer $6,100.

(accounts receivable increases assets and increase in revenue will increase in equity).

C.recieving $6,100.

receiving $6100 will increase cash and decrease accounts receivable, which means net impact on assets is $0.

liabilities and equity are unaffected.

D.

paying off wages will reduce cash (assets), and also liabilities in form of wages payable.

E.

paying of dividends will reduce cash (affecting assets) and also retained earnings (affecting equity).

Assets =	Liabilities +	Equity
$3,800	0 +	$3,800