the following selected events were experienced by either smith eldercare services, inc., a corporation, or…

the following selected events were experienced by either smith eldercare services, inc., a corporation, or jun smith, its major\nstate whether each event (1) increased, (2) decreased, or (3) had no effect on the total assets of the business. identify any specific asset affected. if no effect, indicate the reason.\ntransaction\neffect on total assets\naccount affected or why total assets remain unchanged\na. paid $400 cash on accounts payable.\ndecreased\ncash\nb. made a cash purchase of land for a building site for the business, $89,000.\nno effect\nincrease in assets is same as decrease in assets\nc. sold land and received cash of $69,000 (the land was carried on the company’s books at $69,000).\nno effect\nincrease in assets is same as decrease in assets\nd. received $15,400 cash from customers on account.\nno effect\nincrease in assets is same as decrease in assets\ne. purchased medical equipment and signed a $90,000 promissory note in payment.\nincreased\nequipment\ntransaction\neffect on total assets\naccount affected or why total assets remain unchanged\nf. purchased a flat - screen tv for smith’s home.\ng. paid smith a cash dividend of $4,000.\nh. purchased office supplies on account for $1,200.\ni. borrowed $62,000 from the bank for use in the business.\nj. received $12,000 cash and issued stock to a stockholder.

the following selected events were experienced by either smith eldercare services, inc., a corporation, or jun smith, its major\nstate whether each event (1) increased, (2) decreased, or (3) had no effect on the total assets of the business. identify any specific asset affected. if no effect, indicate the reason.\ntransaction\neffect on total assets\naccount affected or why total assets remain unchanged\na. paid $400 cash on accounts payable.\ndecreased\ncash\nb. made a cash purchase of land for a building site for the business, $89,000.\nno effect\nincrease in assets is same as decrease in assets\nc. sold land and received cash of $69,000 (the land was carried on the company’s books at $69,000).\nno effect\nincrease in assets is same as decrease in assets\nd. received $15,400 cash from customers on account.\nno effect\nincrease in assets is same as decrease in assets\ne. purchased medical equipment and signed a $90,000 promissory note in payment.\nincreased\nequipment\ntransaction\neffect on total assets\naccount affected or why total assets remain unchanged\nf. purchased a flat - screen tv for smith’s home.\ng. paid smith a cash dividend of $4,000.\nh. purchased office supplies on account for $1,200.\ni. borrowed $62,000 from the bank for use in the business.\nj. received $12,000 cash and issued stock to a stockholder.

Answer

Explanation:

Step1: Analyze transaction f

This is a personal - purchase not related to business. So it has no effect on business assets.

Step2: Analyze transaction g

Cash is an asset. Paying a cash dividend decreases cash, thus decreasing total assets.

Step3: Analyze transaction h

Purchasing office supplies on account increases supplies (an asset) and accounts payable (a liability). Total assets increase.

Step4: Analyze transaction i

Borrowing money from the bank increases cash (an asset) and increases a liability (loan payable). Total assets increase.

Step5: Analyze transaction j

Receiving cash increases cash (an asset) and issuing stock affects equity. Total assets increase.

Answer:

Transaction Effect on total assets Account affected or why total assets remain unchanged
f. Purchased a flat - screen TV for Smith’s home No effect Personal transaction not related to business
g. Paid Smith a cash dividend of $4,000 Decreased Cash
h. Purchased office supplies on account for $1,200 Increased Office Supplies
i. Borrowed $62,000 from the bank for use in the business Increased Cash
j. Received $12,000 cash and issued stock to a stockholder Increased Cash