12

Problem 1c: Accounting Equation: Effects of Transactions

1. Miguel Abiti invested $10,000 in Abiti’s Consulting, Inc. Miguel received 10,000 shares of $1 par common stock in return for his investment. By addition and subtraction, show the effects of the transaction on Abiti’s Consulting, Inc.'s resources and sources of resources.

Total
Resources / Total
Sources of Resources
A) / + $10,000 / + $10,000
B) / - $10,000 / - $10,000
C) / + $10,000 / - $10,000
D) / - $10,000 / + $10,000
E) / + $10,000 & - $10,000

2. Abiti’s Consulting purchased $400 of supplies. No cash was paid for the supplies, but Abiti’s Consulting agreed to pay cash within the next 30 days. By addition and subtraction, show the effects of the transaction on Abiti’s Consulting, Inc.'s resources and sources of resources.

Total
Resources / Total
Sources of Resources
A) / - $400 / + $400
B) / + $400 & - $400 / + $0
C) / - $400 / - $400
D) / + $400 / + $400
E) / + $400 / - $400


3. Abiti’s Consulting provided $2,000 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. By addition and subtraction, show the effects of the transaction on Abiti’s Consulting, Inc.'s resources and sources of resources.

Total
Resources / Total
Sources of Resources
A) / - $2,000 / - $2,000
B) / + $2,000 / + $2,000
C) / + $2,000 / - $2,000
D) / - $2,000 / + $2,000
E) / + $2,000 & - $2,000 / + $0

4. Abiti’s Consulting paid $600 to Thomas Bishop for assistance in providing services on the consulting project mentioned in part 3 above. (In part 3, Abiti’s Consulting had provided $2,000 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.) By addition and subtraction, show the effects of the transaction on Abiti’s Consulting, Inc.'s resources and sources of resources.

Total
Resources / Total
Sources of Resources
A) / + $600 & - $600 / + $0
B) / + $600 / - $600
C) / + $600 / + $600
D) / - $600 / - $600
E) / - $600 / + $600


5. Abiti’s Consulting paid cash for one-half of the supplies purchased in part 2 above. The company will pay the remaining amount due next month. (In part 2, Abiti’s Consulting had purchased $400 of supplies. No cash was paid for the supplies, but Abiti’s Consulting agreed to pay cash within the next 30 days.) By addition and subtraction, show the effects of the transaction on Abiti’s Consulting, Inc.'s resources and sources of resources.

Total
Resources / Total
Sources of Resources
A) / + $200 / + $200
B) / + $200 / - $200
C) / - $200 / - $200
D) / - $200 / + $200
E) / + $200 & - $200 / + $0

6. Abiti’s Consulting provided $1,300 of consulting services to a customer who paid cash for the services. By addition and subtraction, show the effects of the transaction on Abiti’s Consulting, Inc.'s resources and sources of resources.

Total
Resources / Total
Sources of Resources
A) / + $1,300 / - $1,300
B) / - $1,300 / + $1,300
C) / + $1,300 & - $1,300 / + $0
D) / - $1,300 / - $1,300
E) / + $1,300 / + $1,300


7. $1,500 cash was received from the customer mentioned in part 3 above. The remaining $500 will be paid by the customer next week. (In part 3, Abiti’s Consulting had provided $2,000 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.) By addition and subtraction, show the effects of the transaction on Abiti’s Consulting, Inc.'s resources and sources of resources.

Total
Resources / Total
Sources of Resources
A) / - $1,500 / - $1,500
B) / + $1,500 / - $1,500
C) / - $1,500 / + $1,500
D) / + $1,500 / + $1,500
E) / + $1,500 & - $1,500 / + $0

8. Abiti’s Consulting declared and paid a $150 cash dividend. By addition and subtraction, show the effects of the transaction on Abiti’s Consulting, Inc.'s resources and sources of resources.

Total
Resources / Total
Sources of Resources
A) / - $150 / + $150
B) / + $150 & - $150 / + $0
C) / + $150 / + $150
D) / + $150 / - $150
E) / - $150 / - $150


9. Abiti’s Consulting paid the phone bill for $40 of telephone services used during June. By addition and subtraction, show the effects of the transaction on Abiti’s Consulting, Inc.'s resources and sources of resources.

Total
Resources / Total
Sources of Resources
A) / + $40 & - $40 / + $0
B) / + $40 / + $40
C) / + $40 / - $40
D) / - $40 / - $40
E) / - $40 / + $40

10. Miguel Abiti invested $10,000 in Abiti’s Consulting, Inc. Miguel received 10,000 shares of $1 par common stock in return for his investment. By addition and subtraction, show the effects of the transaction on the accounting equation of Abiti’s Consulting, Inc.

Total Resources / Sources of
Borrowed
Resources / Sources of Owner
Invested
Resources / Sources of Management
Generated
Resources
Assets / Liabilities / Stockholders’ Equity
Cash / Accounts
Receivable / Supplies / Accounts
Payable / Common
Stock / Retained
Earnings
A) / + $10,000 / + $10,000
B) / - $10,000 / - $10,000
C) / + $10,000 / + $10,000
D) / - $10,000 / + $10,000
E) / - $10,000 / - $10,000


11. Abiti’s Consulting purchased $400 of supplies. No cash was paid for the supplies, but Abiti’s Consulting agreed to pay cash within the next 30 days. By addition and subtraction, show the effects of the transaction on the accounting equation of Abiti’s Consulting, Inc.

Total Resources / Sources of
Borrowed
Resources / Sources of Owner
Invested
Resources / Sources of Management
Generated
Resources
Assets / Liabilities / Stockholders’ Equity
Cash / Accounts
Receivable / Supplies / Accounts
Payable / Common
Stock / Retained
Earnings
A) / - $400 / + $400
B) / + $400 / + $400
C) / - $400 / + $400
D) / + $400 / + $400
E) / + $400 / + $400

12. Abiti’s Consulting provided $2,000 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. By addition and subtraction, show the effects of the transaction on the accounting equation of Abiti’s Consulting, Inc.

Total Resources / Sources of
Borrowed
Resources / Sources of Owner
Invested
Resources / Sources of Management
Generated
Resources
Assets / Liabilities / Stockholders’ Equity
Cash / Accounts
Receivable / Supplies / Accounts
Payable / Common
Stock / Retained
Earnings
A) / + $2,000 / + $2,000
B) / + $2,000 / + $2,000
C) / + $2,000 / + $2,000
D) / + $2,000 / + $2,000
E) / + $2,000 / - $2,000


13. Abiti’s Consulting paid $600 to Thomas Bishop for assistance in providing services on the consulting project mentioned in part 12 above. (In part 12, Abiti’s Consulting had provided $2,000 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.) By addition and subtraction, show the effects of the transaction on the accounting equation of Abiti’s Consulting, Inc.

Total Resources / Sources of
Borrowed
Resources / Sources of Owner
Invested
Resources / Sources of Management
Generated
Resources
Assets / Liabilities / Stockholders’ Equity
Cash / Accounts
Receivable / Supplies / Accounts
Payable / Common
Stock / Retained
Earnings
A) / - $600 / - $600
B) / - $600 / + $600
C) / - $600 / - $600
D) / - $600 / + $600
E) / + $600 / - $600


14. Abiti’s 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, Abiti’s Consulting had purchased $400 of supplies. No cash was paid for the supplies, but Abiti’s Consulting agreed to pay cash within the next 30 days.) By addition and subtraction, show the effects of the transaction on the accounting equation of Abiti’s Consulting, Inc.

Total Resources / Sources of
Borrowed
Resources / Sources of Owner
Invested
Resources / Sources of Management
Generated
Resources
Assets / Liabilities / Stockholders’ Equity
Cash / Accounts
Receivable / Supplies / Accounts
Payable / Common
Stock / Retained
Earnings
A) / - $200 / - $200
B) / - $200 / + $200
C) / - $200 / - $200
D) / - $200 / - $200
E) / - $200 / + $200

15. Abiti’s Consulting provided $1,300 of consulting services to a customer who paid cash for the services. By addition and subtraction, show the effects of the transaction on the accounting equation of Abiti’s Consulting, Inc.

Total Resources / Sources of
Borrowed
Resources / Sources of Owner
Invested
Resources / Sources of Management
Generated
Resources
Assets / Liabilities / Stockholders’ Equity
Cash / Accounts
Receivable / Supplies / Accounts
Payable / Common
Stock / Retained
Earnings
A) / + $1,300 / + $1,300
B) / + $1,300 / - $1,300
C) / + $1,300 / + $1,300
D) / + $1,300 / - $1,300
E) / + $1,300 / + $1,300


16. $1,500 cash was received from the customer mentioned in part 12 above. The remaining $500 will be paid by the customer next week. (In part 12, Abiti’s Consulting had provided $2,000 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.) By addition and subtraction, show the effects of the transaction on the accounting equation of Abiti’s Consulting, Inc.

Total Resources / Sources of
Borrowed
Resources / Sources of Owner
Invested
Resources / Sources of Management
Generated
Resources
Assets / Liabilities / Stockholders’ Equity
Cash / Accounts
Receivable / Supplies / Accounts
Payable / Common
Stock / Retained
Earnings
A) / + $1,500 / - $1,500
B) / + $1,500 / + $1,500
C) / + $1,500 / + $1,500
D) / + $1,500 / + $1,500
E) / + $1,500 / + $1,500

17. Abiti’s Consulting declared and paid a $150 cash dividend. By addition and subtraction, show the effects of the transaction on the accounting equation of Abiti’s Consulting, Inc.

Total Resources / Sources of
Borrowed
Resources / Sources of Owner
Invested
Resources / Sources of Management
Generated
Resources
Assets / Liabilities / Stockholders’ Equity
Cash / Accounts
Receivable / Supplies / Accounts
Payable / Common
Stock / Retained
Earnings
A) / - $150 / - $150
B) / - $150 / - $150
C) / - $150 / - $150
D) / - $150 / + $150
E) / + $150 / - $150


18. Abiti’s Consulting paid the phone bill for $40 of telephone services used during June. By addition and subtraction, show the effects of the transaction on the accounting equation of Abiti’s Consulting, Inc.

Total Resources / Sources of
Borrowed
Resources / Sources of Owner
Invested
Resources / Sources of Management
Generated
Resources
Assets / Liabilities / Stockholders’ Equity
Cash / Accounts
Receivable / Supplies / Accounts
Payable / Common
Stock / Retained
Earnings
A) / - $40 / + $40
B) / - $40 / - $40
C) / - $40 / - $40
D) / - $40 / + $40
E) / + $40 / - $40

19. At the end of June, the Abiti’s Consulting, Inc.’s accounting system showed the following amounts: cash = $11,810, accounts receivable = $500, supplies = $400, accounts payable = $200, common stock = $10,000, and retained earnings = $2,510. The retained earnings amount was based on the following: resources resulting from services provided to customers = $3,300, resources used up to provide services to customers = $640, and dividends = $150. Determine the dollar amount of Abiti’s Consulting, Inc.'s total resources at the end of June.

A) / $11,810
B) / $200
C) / $12,710
D) / $10,000
E) / $2,660


20. At the end of June, the Abiti’s Consulting, Inc.’s accounting system showed the following amounts: cash = $11,810, accounts receivable = $500, supplies = $400, accounts payable = $200, common stock = $10,000, and retained earnings = $2,510. The retained earnings amount was based on the following: resources resulting from services provided to customers = $3,300, resources used up to provide services to customers = $640, and dividends = $150. Determine the dollar amount of resources on hand at the end of June that Abiti’s Consulting, Inc. obtained through borrowing.

A) / $12,710
B) / $10,000
C) / $2,660
D) / $11,810
E) / $200

21. At the end of June, the Abiti’s Consulting, Inc.’s accounting system showed the following amounts: cash = $11,810, accounts receivable = $500, supplies = $400, accounts payable = $200, common stock = $10,000, and retained earnings = $2,510. The retained earnings amount was based on the following: resources resulting from services provided to customers = $3,300, resources used up to provide services to customers = $640, and dividends = $150. Determine the dollar amount of resources on hand at the end of June that Abiti’s Consulting, Inc. obtained through the owner’s investments.

A) / $12,710
B) / $10,000
C) / $2,660
D) / $11,810
E) / $200

22. At the end of June, the Abiti’s Consulting, Inc.’s accounting system showed the following amounts: cash = $11,810, accounts receivable = $500, supplies = $400, accounts payable = $200, common stock = $10,000, and retained earnings = $2,510. The retained earnings amount was based on the following: resources resulting from services provided to customers = $3,300, resources used up to provide services to customers = $640, and dividends = $150. Determine the Abiti’s Consulting, Inc.'s net income for June.

A) / $2,660
B) / $11,810
C) / $3,300
D) / $2,510
E) / $12,710


23. At the end of June, the Abiti’s Consulting, Inc.’s accounting system showed the following amounts: cash = $11,810, accounts receivable = $500, supplies = $400, accounts payable = $200, common stock = $10,000, and retained earnings = $2,510. The retained earnings amount was based on the following: net income = $2,660 and dividends = $150. Determine the net dollar amount of resources that Abiti’s Consulting, Inc. generated through management operations in June.