below is a list of activities for orange heffer incorporated.\nrequired:\nfor each activity, indicate the…

below is a list of activities for orange heffer incorporated.\nrequired:\nfor each activity, indicate the impact on the accounting equation. after doing so for all transactions, ensure that the accounting equation remains in balance. the first item is provided as an example.\nnote: decreases to account classifications should be entered as a negative.\ntransaction assets = liabilities + stockholders equity\n1. provide services to customers on account, $1,730. $ 1,730 = $ 0 + $ 1,730\n2. pay $320 for current months rent\n3. hire a new employee, who will be paid $630 at the end of each month\n4. pay $110 for advertising aired in the current period\n5. purchase office supplies for $320 cash.\n6. receive cash of $1,130 from customers in (1) above\n7. obtain a loan from the bank for $8,300.\n8. receive a bill of $470 for utility costs in the current period\n9. issue common stock for $11,300 cash\n10 pay $630 to employee in (3) above\ntotals

below is a list of activities for orange heffer incorporated.\nrequired:\nfor each activity, indicate the impact on the accounting equation. after doing so for all transactions, ensure that the accounting equation remains in balance. the first item is provided as an example.\nnote: decreases to account classifications should be entered as a negative.\ntransaction assets = liabilities + stockholders equity\n1. provide services to customers on account, $1,730. $ 1,730 = $ 0 + $ 1,730\n2. pay $320 for current months rent\n3. hire a new employee, who will be paid $630 at the end of each month\n4. pay $110 for advertising aired in the current period\n5. purchase office supplies for $320 cash.\n6. receive cash of $1,130 from customers in (1) above\n7. obtain a loan from the bank for $8,300.\n8. receive a bill of $470 for utility costs in the current period\n9. issue common stock for $11,300 cash\n10 pay $630 to employee in (3) above\ntotals

Answer

Explanation:

Step1: Rent payment

Assets decrease by $320 (cash), Stockholders' Equity decreases by $320 (expense reduces retained earnings). So Assets: -$320, Liabilities: $0, Stockholders' Equity: -$320.

Step2: New employee hired

No immediate impact on accounting equation as no transaction has occurred yet. So Assets: $0, Liabilities: $0, Stockholders' Equity: $0.

Step3: Advertising payment

Assets decrease by $110 (cash), Stockholders' Equity decreases by $110 (expense reduces retained earnings). So Assets: -$110, Liabilities: $0, Stockholders' Equity: -$110.

Step4: Office - supplies purchase

Assets increase by $320 (office supplies) and decrease by $320 (cash). Net change in assets is $0. So Assets: $0, Liabilities: $0, Stockholders' Equity: $0.

Step5: Cash receipt from customers

Assets increase by $1,130 (cash) and decrease by $1,130 (accounts receivable). Net change in assets is $0. So Assets: $0, Liabilities: $0, Stockholders' Equity: $0.

Step6: Bank loan

Assets increase by $8,300 (cash), Liabilities increase by $8,300 (loan payable). So Assets: $8,300, Liabilities: $8,300, Stockholders' Equity: $0.

Step7: Utility bill received

Liabilities increase by $470 (utilities payable), Stockholders' Equity decreases by $470 (expense reduces retained earnings). So Assets: $0, Liabilities: $470, Stockholders' Equity: -$470.

Step8: Issue of common stock

Assets increase by $11,300 (cash), Stockholders' Equity increases by $11,300 (common - stock). So Assets: $11,300, Liabilities: $0, Stockholders' Equity: $11,300.

Step9: Paying employee

Assets decrease by $630 (cash), Liabilities decrease by $630 (if previously accrued as a liability), or Stockholders' Equity decreases by $630 (expense reduces retained earnings if not accrued). Assuming no prior accrual, Assets: -$630, Liabilities: $0, Stockholders' Equity: -$630.

Step10: Calculate totals

Add up all changes for each category. Assets: $1,730 - 320+0 - 110+0+0 + 8,300+0+11,300 - 630=$19,970 Liabilities: $0+0+0+0+0+8,300 + 470+0+0=$8,770 Stockholders' Equity: $1,730 - 320+0 - 110+0+0+0 - 470+11,300 - 630=$11,200 And $19,970 = $8,770+$11,200

Transaction Assets = Liabilities + Stockholders' Equity
2. Pay $320 for current month's rent -$320 = $0 + -$320
3. Hire a new employee, who will be paid $630 at the end of each month $0 = $0 + $0
4. Pay $110 for advertising aired in the current period -$110 = $0 + -$110
5. Purchase office supplies for $320 cash $0 = $0 + $0
6. Receive cash of $1,130 from customers in (1) above $0 = $0 + $0
7. Obtain a loan from the bank for $8,300 $8,300 = $8,300 + $0
8. Receive a bill of $470 for utility costs in the current period $0 = $470 + -$470
9. Issue common stock for $11,300 cash $11,300 = $0 + $11,300
10. Pay $630 to employee in (3) above -$630 = $0 + -$630
Totals $19,970 = $8,770 + $11,200

Answer:

Transaction Assets = Liabilities + Stockholders' Equity
2 -$320 = $0 + -$320
3 $0 = $0 + $0
4 -$110 = $0 + -$110
5 $0 = $0 + $0
6 $0 = $0 + $0
7 $8,300 = $8,300 + $0
8 $0 = $470 + -$470
9 $11,300 = $0 + $11,300
10 -$630 = $0 + -$630
Totals $19,970 = $8,770 + $11,200