Identifying transactions Set out below are the balances in Holmes Company’s asset and equity accounts at the end of each day in a nine-day period. You’ll notice that two or more of the account balances change each day. Identify for each day the transaction which occurred (there was only one), based on the movement in the balance sheet accounts from the previous day. For example, by comparing the balances at the close of 1 June with those at the close of 31 May, we see that the company borrowed 6,000 in cash from its bank on 1 June. (No transactions occurred during the weekend of 3–4 June.)

Balances at the close of . . .

31/5 1/6 2/6 5/6 6/6 7/6 8/6 9/6 Holmes Company

(amounts in 000)

Assets Cash 2 8 6 3 3 3 13 5 Accounts receivable 24 24 24 24 24 24 14 14 Inventories 15 15 22 22 22 20 20 20 Prepaid rent 3 3 3 6 6 6 6 6 Property and equipment 10 10 10 10 14 14 14 14 Total 54 60 65 65 69 67 67 59 Shareholders’ equity and liabilities Accounts payable 20 20 25 25 25 23 23 15 Bank loans 7 13 13 13 13 13 13 13 Shareholders’ equity 27 27 27 27 31 31 31 31 Total 54 60 65 65 69 67 67 59 AppenedixLO1