Acct

The following selected transactions were completed by Reuben's Delivery Service during October:
1. Received cash from owner in exchange for capital stock, $20,000.
2. Purchased supplies for cash, $900.
3. Paid rent for October, $3,000.
4. Paid advertising expense, $2,500.
5. Received cash for providing delivery services, $23,100.
6. Billed customers for delivery services on account, $41,750.
7. Paid creditors on account, $4,500.
8. Received cash from customers on account, $36,200.
9. Determined that the cost of supplies on hand was $175 and $725 of supplies had been used during the month.
10. Paid dividends, $1,000.
Indicate the effect of each transaction on the accounting equation by listing the numbers identifying the transactions, (1) through (10), in a column, and inserting at the right of each number the appropriate letter from the following list:
a. Increase in an asset, decrease in another asset.
b. Increase in an asset, increase in a liability.
c. Increase in an asset, increase in stockholders' equity.
d. Decrease in an asset, decrease in a liability.
e. Decrease in an asset, decrease in stockholders' equity.

SOLUTION

1. c. Increase in an asset, increase in stockholders' equity. 2. a. Increase in an asset, decrease in another asset. 3. e. Decrease in an asset, decrease in stockholders' equity. 4. e. Decrease in an asset, decrease in stockholders' equity. 5. c. Increase in an asset, increase in stockholders' equity. 6. c. Increase in an asset, increase in stockholders' equity.

7. d. Decrease in an asset, decrease in a liability.

8. a. Increase in an asset, decrease in another asset.

9. e. Decrease in an asset, decrease in stockholders' equity.

10. e. Decrease in an asset, decrease in stockholders' equity.