E1-20 Using the accounting equation to analyze transactions [10–20 min]
Requirement
1. Indicate the effects of the following business transactions on the accounting
equation of a Viviani Video store. Transaction (a) is answered as a guide.
a. Received cash of $8,000 and issued common stock.
Answer: Increase asset (Cash)
Increase stockholders’ equity (Common stock)
b. Earned video rental revenue on account, $1,800.
c. Purchased office furniture on account, $400.
d. Received cash on account, $600.Paid cash on account, $100.
e. Sold land for $15,000, which was the cost of the land.
f. Rented videos and received cash of $300.
g. Paid monthly office rent of $900.
h. Paid $200 cash to purchase supplies that will be used in the future.
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