DEBIT AND CREDIT EFFECTS OF TRANSACTIONS Lincoln Corporation was involved in the following transactions during the current year:

a. The owners invested cash in the business in exchange for common stock.

b. Lincoln borrowed cash from the local bank on a note payable.

c. Lincoln purchased operating assets on credit.

d. Lincoln purchased supplies inventory on credit.

e. Lincoln provided services in exchange for cash from the customer.

f. A customer secured services from Lincoln on credit.

g. The payable from transaction d was paid in full.

h. The receivable from transaction f was collected in full.

i. Lincoln paid wages in cash.

j. Lincoln used a portion of the supplies purchased in transaction d.

k. Lincoln paid dividends in cash.

Required:

Prepare a table like the one shown below and indicate the effect on assets, liabilities, and stockholders’ equity. Be sure to enter debits and credits in the appropriate columns for each of the transactions. Transaction a is entered as an example:

Assets ¼ Liabilities þ Stockholders’ Equity Contributed Capital Retained Earnings

a. Increase

(Debit)

Increase

(Credit)

Exercise