Problem 1d: Accounting Equation: Effects of Transactions
Hayes' Consulting, Inc. engaged in the following transactions in July. By addition and subtraction, show the effects of the transactions on Hayes' Consulting, Inc.'s resources and sources of resources. Notice that the first transaction has been processed for you.
Jeff Hayes invested $5,000 in Hayes' Consulting, Inc. Jeff received 5,000 shares of $1 par common stock in return for his investment.
Total Total Resources Sources of Resources
+ $5,000 + $5,000
The company’s receipt of cash increased its resources. The company now has $5,000 more resources (cash) than it had before it received the cash. Since the company did not give up any resources to receive the cash, but received the cash from the owner, the company’s sources of resources (common stock) increased by $5,000.
1. Hayes' Consulting provided $1,000 of consulting services to a customer. The customer did not pay cash for the services, but agreed to pay cash within the next 30 days.
Total Total Resources Sources of Resources
A) + $1,000 + $1,000
B) - $1,000 - $1,000
C) + $1,000 - $1,000
D) - $1,000 + $1,000
E) + $1,000 & - $1,000 + $0 2
2. Hayes' Consulting paid $300 to Barbara Borsa for assistance in providing services on the consulting project mentioned in part 1 above. (In part 1, Hayes' Consulting had provided $1,000 of consulting services to a customer. The customer did not pay cash for the services, but agreed to pay cash within the next 30 days.)
Total Total Resources Sources of Resources
A) + $300 & - $300 + $0
B) + $300 + $300
C) - $300 - $300
D) + $300 - $300
E) - $300 + $300
3. Hayes' Consulting purchased $200 of supplies. No cash was paid for the supplies, but Hayes' Consulting agreed to pay cash within the next 30 days.
Total Total Resources Sources of Resources
A) - $200 + $200
B) + $200 & - $200 + $0
C) + $200 - $200
D) - $200 - $200
E) + $200 + $200 3
4. Hayes' Consulting provided $800 of consulting services to a customer who paid cash for the services.
Total Total Resources Sources of Resources
A) + $800 - $800
B) - $800 + $800
C) + $800 & - $800 + $0
D) + $800 + $800
E) - $800 - $800
5. $750 cash was received from the customer mentioned in part 1 above. The remaining $250 will be paid by the customer next week. (In part 1, Hayes' Consulting had provided $1,000 of consulting services to a customer. The customer did not pay cash for the services, but agreed to pay cash within the next 30 days.)
Total Total Resources Sources of Resources
A) - $750 - $750
B) + $750 - $750
C) - $750 + $750
D) + $750 & - $750 + $0
E) + $750 + $750 4
6. Hayes' Consulting paid cash for one-half of the supplies purchased in part 3 above. The company will pay the remaining amount due next month. (In part 3, Hayes' Consulting had purchased $200 of supplies. No cash was paid for the supplies, but Hayes' Consulting agreed to pay cash within the next 30 days.)
Total Total Resources Sources of Resources
A) + $100 + $100
B) - $100 - $100
C) + $100 - $100
D) - $100 + $100
E) + $200 & - $200 + $0
7. Hayes' Consulting paid the phone bill for $30 of telephone services used during July.
Total Total Resources Sources of Resources
A) + $30 & - $30 + $0
B) + $30 + $30
C) - $30 - $30
D) + $30 - $30
E) - $30 + $30 5
8. Hayes' Consulting declared and paid a $50 cash dividend.
Total Total Resources Sources of Resources
A) - $50 + $50
B) + $50 & - $50 + $0
C) + $50 + $50
D) - $50 - $50
E) + $50 - $50
By addition and subtraction, show the effects of the transactions on the accounting equation of Hayes' Consulting, Inc. Notice that the first transaction has been processed for you.
Jeff Hayes invested $5,000 in Hayes' Consulting, Inc. Jeff received 5,000 shares of $1 par common stock in return for his investment.
Sources of Sources of Sources of Owner Management Borrowed Invested Generated Total Resources Resources Resources Resources Assets Liabilities Stockholders’ Equity Accounts Accounts Common Retained Cash Receivable Supplies Payable Stock Earnings
+ $5,000 + $5,000
The company’s receipt of cash increased its cash by $5,000. Since the company received the cash from the owner in return for shares of the company’s common stock, the company’s common stock also increased by $5,000. 6
9. Hayes' Consulting provided $1,000 of consulting services to a customer. The customer did not pay cash for the services, but agreed to pay cash within the next 30 days.
Sources of Sources of Sources of Owner Management Borrowed Invested Generated Total Resources Resources Resources Resources Assets Liabilities Stockholders’ Equity Accounts Accounts Common Retained Cash Receivable Supplies Payable Stock Earnings
A) + $1,000 + $1,000
B) + $1,000 + $1,000
C) + $1,000 - $1,000
D) + $1,000 + $1,000
E) + $1,000 + $1,000
10. Hayes' Consulting paid $300 to Barbara Borsa for assistance in providing services on the consulting project mentioned in part 9 above. (In part 9, Hayes' Consulting had provided $1,000 of consulting services to a customer. The customer did not pay cash for the services, but agreed to pay cash within the next 30 days.)
Sources of Sources of Sources of Owner Management Borrowed Invested Generated Total Resources Resources Resources Resources Assets Liabilities Stockholders’ Equity Accounts Accounts Common Retained Cash Receivable Supplies Payable Stock Earnings
A) - $300 - $300
B) - $300 - $300
C) - $300 + $300
D) - $300 + $300
E) + $300 - $300 7
11. Hayes' Consulting purchased $200 of supplies. No cash was paid for the supplies, but Hayes' Consulting agreed to pay cash within the next 30 days.
Sources of Sources of Sources of Owner Management Borrowed Invested Generated Total Resources Resources Resources Resources Assets Liabilities Stockholders’ Equity Accounts Accounts Common Retained Cash Receivable Supplies Payable Stock Earnings
A) + $200 + $200
B) - $200 + $200
C) - $200 + $200
D) + $200 + $200
E) + $200 + $200
12. Hayes' Consulting provided $800 of consulting services to a customer who paid cash for the services.
Sources of Sources of Sources of Owner Management Borrowed Invested Generated Total Resources Resources Resources Resources Assets Liabilities Stockholders’ Equity Accounts Accounts Common Retained Cash Receivable Supplies Payable Stock Earnings
A) + $800 + $800
B) + $800 - $800
C) + $800 + $800
D) + $800 + $800
E) + $800 - $800 8
13. $750 cash was received from the customer mentioned in part 9 above. The remaining $250 will be paid by the customer next week. (In part 9, Hayes' Consulting had provided $1,000 of consulting services to a customer. The customer did not pay cash for the services, but agreed to pay cash within the next 30 days.)
Sources of Sources of Sources of Owner Management Borrowed Invested Generated Total Resources Resources Resources Resources Assets Liabilities Stockholders’ Equity Accounts Accounts Common Retained Cash Receivable Supplies Payable Stock Earnings
A) + $750 + $750
B) + $750 + $750
C) + $750 + $750
D) + $750 + $750
E) + $750 - $750
14. Hayes' Consulting paid cash for one-half of the supplies purchased in part 11 above. The company will pay the remaining amount due next month. (In part 11, Hayes' Consulting had purchased $200 of supplies. No cash was paid for the supplies, but Hayes' Consulting agreed to pay cash within the next 30 days.)
Sources of Sources of Sources of Owner Management Borrowed Invested Generated Total Resources Resources Resources Resources Assets Liabilities Stockholders’ Equity Accounts Accounts Common Retained Cash Receivable Supplies Payable Stock Earnings
A) - $100 - $100
B) - $100 + $100
C) - $100 - $100
D) - $100 - $100
E) - $100 + $100 9
15. Hayes' Consulting paid the phone bill for $30 of telephone services used during July.
Sources of Sources of Sources of Owner Management Borrowed Invested Generated Total Resources Resources Resources Resources Assets Liabilities Stockholders’ Equity Accounts Accounts Common Retained Cash Receivable Supplies Payable Stock Earnings
A) - $30 - $30
B) - $30 + $30
C) - $30 - $30
D) - $30 + $30
E) + $30 - $30
16. Hayes' Consulting declared and paid a $50 cash dividend.
Sources of Sources of Sources of Owner Management Borrowed Invested Generated Total Resources Resources Resources Resources Assets Liabilities Stockholders’ Equity Accounts Accounts Common Retained Cash Receivable Supplies Payable Stock Earnings
A) - $50 - $50
B) - $50 - $50
C) - $50 - $50
D) - $50 + $50
E) + $50 - $50 10
17. At the end of July, the Hayes’ Consulting, Inc.’s accounting system showed the following amounts: cash = $6,070, accounts receivable = $250, supplies = $200, accounts payable = $100, common stock = $5,000, and retained earnings = $1,420. The retained earnings amount was based on the following: resources resulting from services provided to customers = $1,800, resources used up to provide services to customers = $330, and dividends = $50. Determine the dollar amount of Hayes' Consulting, Inc.'s total resources at the end of July.
A) $6,070 B) $6,520 C) $100 D) $6,420 E) $1,470
18. At the end of July, the Hayes’ Consulting, Inc.’s accounting system showed the following amounts: cash = $6,070, accounts receivable = $250, supplies = $200, accounts payable = $100, common stock = $5,000, and retained earnings = $1,420. The retained earnings amount was based on the following: resources resulting from services provided to customers = $1,800, resources used up to provide services to customers = $330, and dividends = $50. Determine the dollar amount of resources on hand at the end of July that Hayes' Consulting, Inc. obtained through borrowing.
A) $6,520 B) $6,070 C) $5,000 D) $100 E) $1,470
19. At the end of July, the Hayes’ Consulting, Inc.’s accounting system showed the following amounts: cash = $6,070, accounts receivable = $250, supplies = $200, accounts payable = $100, common stock = $5,000, and retained earnings = $1,420. The retained earnings amount was based on the following: resources resulting from services provided to customers = $1,800, resources used up to provide services to customers = $330, and dividends = $50. Determine the dollar amount of resources on hand at the end of July that Hayes' Consulting, Inc. obtained through the owner’s investments.
A) $5,000 B) $6,420 C) $1,470 D) $100 E) $6,520 11
20. At the end of July, the Hayes’ Consulting, Inc.’s accounting system showed the following amounts: cash = $6,070, accounts receivable = $250, supplies = $200, accounts payable = $100, common stock = $5,000, and retained earnings = $1,420. The retained earnings amount was based on the following: resources resulting from services provided to customers = $1,800, resources used up to provide services to customers = $330, and dividends = $50. Determine the Hayes' Consulting, Inc.'s net income for July.
A) $1,800 B) $330 C) $1,420 D) $250 E) $1,470
21. At the end of July, the Hayes’ Consulting, Inc.’s accounting system showed the following amounts: Cash = $6,070, accounts receivable = $250, supplies = $200, accounts payable = $100, common stock = $5,000, and retained earnings = $1,420. The retained earnings amount was based on the following: net income = $1,470 and dividends = $50. Determine the net dollar amount of resources that Hayes' Consulting, Inc. generated through management operations in July.
A) $1,420 B) $250 C) $1,470 D) $1,800 E) $330
22. At the end of July, the Hayes’ Consulting, Inc.’s accounting system showed the following amounts: Cash = $6,070, accounts receivable = $250, supplies = $200, accounts payable = $100, common stock = $5,000, and retained earnings = $1,420. The retained earnings amount was based on the following: net income = $1,470 and dividends = $50. Determine the dollar amount of resources on hand at the end of July that Hayes' Consulting, Inc. obtained through management operations and kept in the company.
A) $1,470 B) $1,420 C) $6,520 D) $5,000 E) $6,420