Reference no: EM132687219

Problem 1: Describe the impact if the following transactions and events will have on the balance sheet and/or the income statement. In this question, you do not have to worry about the cash flow statement.

For example, assume the owner contributed $20,000, owner's equity on the balance sheet would also increase by the same amount. The balance sheet will increase.

There is no impact on the income statement.

If a transaction or event affects the income statement, you cannot simply state the equity would be affected. You MUST specify how this would happen. That is, you must specify whether it would affect the income or expense. When dealing with assets or liabilities, you must name a relevant account, such as cash, building, loan payable, etc.

Two marks for transactions (a) to (h) inclusive. Four marks for transaction (I)

(a) The business paid $5,000 for a new computer
(b) The business bought some office furniture for $8,000 on credit
(c) The business received a bill of $900 for gas and electricity used. This bill will be paid later
(d) Two weeks after the computer was installed, it fell on the ground and was smashed. It was not insured
(e) The business performed a service for $900 on credit
(f) The client in ( e ) paid their bill
(g) The business paid its bill for the furniture in (b)
(h) The total wages paid for the period was $5,000
(i) The business sold some inventory that cost $500 for $900 cash.