The following transactions occur for the Hamilton Manufacturers. (a) Provide services to customers on account for $4,900. (b) Purchase equipment by signing a note with the bank for $10,300. (c) Pay advertising of $2,000 for the current month. Analyze each transaction and indicate the amount of increases and decreases in the accounting equation. (Enter "0" wherever required.)

Question

Halle Mccoy

Business

29 June, 21:24

The following transactions occur for the Hamilton Manufacturers. (a) Provide services to customers on account for $4,900. (b) Purchase equipment by signing a note with the bank for $10,300. (c) Pay advertising of $2,000 for the current month. Analyze each transaction and indicate the amount of increases and decreases in the accounting equation. (Enter "0" wherever required.)

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Dania Alvarado · Answer 1

Accounting equation is as follows:

Total assets = Total liabilities + Stockholder's equity

(a) Providing services to the customers on account will increase the stockholders equity in terms of service revenue by $4,900 and increases the total assets in terms of account receivable by $4,900.

(b) Purchasing an equipment at a cost of $10,300 by signing a note with the bank will increase the total assets in terms of equipment by $10,300 and also increases the liabilities in terms of notes payable by $10,300.

(c) Payment of advertising expenses for the current month reduces the total assets in terms of cash by $2,000 and also decreases the stockholder's equity by $2,000.