22 a company pays $1,300 cash for supplies previously purchased on account. indicate the amount of increases…
22 a company pays $1,300 cash for supplies previously purchased on account. 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 cash account
Cash is an asset. Paying $1,300 in cash decreases the asset account by $1,300. So Assets = - 1300.
Step2: Analyze accounts - payable account
When supplies were purchased on account, a liability (accounts - payable) was created. Paying off the amount owed decreases the liability. Since the amount paid is $1,300, Liabilities = - 1300.
Step3: Analyze stockholders' equity
This transaction has no impact on stockholders' equity. So Stockholders' Equity = 0.
Answer:
| Assets | = | Liabilities | + | Stockholders' Equity |
|---|---|---|---|---|
| - 1300 | = | - 1300 | + | 0 |