Li Wang Computer Timeshare Company entered into these transactions during May 1998: 1. Purchased computer terminals for
Question:
Li Wang Computer Timeshare Company entered into these transactions during May 1998:
1. Purchased computer terminals for \(\$ 19,000\) from Digital Equipment on account.
2. Paid \(\$ 4,000\) cash for May rent on storage space.
3. Received \(\$ 15,000\) cash from customers for contracts billed in April.
4. Provided computer services to Brieske Construction Company for \(\$ 3,000\) cash.
5. Paid Southern States Power Co. \(\$ 11,000\) cash for energy usage in May.
6. Li Wang invested an additional \(\$ 32,000\) in the business in exchange for common stock of the company.
7. Paid Digital Equipment for the terminals purchased in (1).
8. Incurred advertising expense for May of \(\$ 1,000\) on account.
\section*{Instructions}
Indicate with the appropriate letter whether each of the transactions above results in:
(a) an increase in assets and a decrease in assets.
(b) an increase in assets and an increase in stockholders' equity.
(c) an increase in assets and an increase in liabilities.
(d) a decrease in assets and a decrease in stockholders' equity.
(e) a decrease in assets and a decrease in liabilities.
(f) an increase in liabilities and a decrease in stockholders' equity.
(g) an increase in stockholders' equity and a decrease in liabilities.
Step by Step Answer:
Financial Accounting Tools For Business Decision Making
ISBN: 9780471169192
1st Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso