21 a company purchases supplies on account for $1,800. indicate the amount of increases and decreases in the…
21 a company purchases supplies on account for $1,800. indicate the amount of increases and decreases in the accounting equation. note: decreases to account classifications should be entered as a negative.
Answer
Explanation:
Step1: Analyze asset change
When a company purchases supplies on account, supplies (an asset) increase by $1,800. So Assets = + 1800.
Step2: Analyze liability change
Since the purchase is on account, accounts - payable (a liability) increases by $1,800. So Liabilities = + 1800.
Step3: Analyze stockholders' equity change
There is no transaction that directly affects stockholders' equity in this purchase - on - account transaction. So Stockholders' Equity = 0.
Answer:
Assets: + 1800 Liabilities: + 1800 Stockholders' Equity: 0