TRANSACTION ANALYSIS The following events occurred for Parker Company.

a. Paid $5,000 cash for land

b. Performed consulting services for a client in exchange for $1,200 cash

c. Performed consulting services for a client on account, $700

d. Stockholders invested $12,000 cash in the business

e. Purchased office supplies on account, $300

f. Collected $500 from client in transaction c g. Paid $250 on account for supplies purchased in transaction e h. Paid $200 cash for the current month’s rent i. Paid a $1,000 cash dividend to stockholders Required:

. Analyze the effect of each transaction on the accounting equation. For example, for transaction

a, the answer is ‘‘Increase assets (land) $5,000 and decrease assets (cash)

$5,000.’’

. For

e, what accounting principle did you use to determine the amount to be recorded for supplies?

Exercise