eBook

Nature of Transactions

Kristoff Walker operates his own catering service. Summary financial data for February are presented in equation form as follows. Each line designated by a number indicates the effect of a transaction on the equation. Each increase and decrease in owner's equity, except transaction (5), affects net income.

Assets = Liabilities + Owner's Equity

Cash + Supplies + Land = Accounts Payable + Kristoff Walker, Capital - Kristoff Walker, Drawing + Fees Earned - Expenses

Bal. 34,700 4,500 86,800 9,400 116,600

1. +40,600 +40,600

2. -17,400 +17,400

3. -30,200 -30,200

4. +1,700 +1,700

5. -2,300 -2,300

6. -8,300 -8,300

7. -3,500 -3,500

Bal. 17,100 2,700 104,200 2,800 116,600 -2,300 40,600 -33,700

a. (1) Select the description for transaction 1.

a. (2) Select the description for transaction 2.

a. (3) Select the description for transaction 3.

a. (4) Select the description for transaction 4.

a. (5) Select the description for transaction 5.

a. (6) Select the description for transaction 6.

a. (7) Select the description for transaction 7.

b. What is the amount of the net decrease in cash during the month?

$

c. What is the amount of the net increase in owner's equity during the month?

$

d. What is the amount of the net income for the month?

$

e. How much of the net income for the month was retained in the business?

$