Rudy Gandolfi owns and operates Rudy?s Furniture Emporium Inc. The balance sheet totals for assets, liabilities, and stockholders? equity at August 1, 2019, are as indicated. Described here are several transactions entered into by the company throughout the month of August.

Required:

a. Indicate the amount and effect (+ or ?) of each transaction on total assets, total liabilities, and total stockholders? equity, and then compute the new totals for each category. The first transaction is provided as an illustration.

b. What was the amount of net income (or loss) during August? How much were total revenues and total expenses during August?

c. What were the net changes during the month of August in total assets, total liabilities, and total stockholders? equity?

d. Explain to Rudy Gandolfi which transactions caused the net change in his stockholders? equity during August.

e. Explain why dividend payments are not an expense, but interest is an expense.

f. Explain why the money borrowed from the bank increased assets but did not increase net income.

g. Explain why paying off accounts payable and collecting accounts receivable do not affect net income.

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Stockholder's Assets = Liabilities + Equity August 1, 2019, totals August 3, borrowed $50,000 in cash from the bank S700,000 S500,000 $200,000 + 50,000 + 50,000 New totals ... $200,000 S750,000 S550,000 August 7, bought merchandise inventory valued at $75,000 on account New totals August 10, paid $25,000 cash for operating expenses.. New totals . August 14, received $120,000 in cash from sales of merchandise that had cost $72,000 New totals ... August 17, paid $60,000 owed on accounts payable New totals August 21, collected $44,000 of accounts receivable. New totals August 24, repaid $30,000 to the bank plus $1,000 interest New totals August 29, paid Rudy Gandolfi a cash dividend of $15,000 New totals || |