L03-2, L03-3, L03-4, L03-5, L03-6 EXERCISE 3.7 Effect of Transactions on the Accounting Equation A number of transactions of Claypool Construction are described as follows in terms of accounts debited and credited. 1. Debit Wages Expense; credit Wages Payable. 2. Debit Accounts Receivable; credit Construction Revenue. 3. Debit Dividends; credit Cash. 4. Debit Office Supplies; credit Accounts Payable. 5. Debit Repairs Expense; credit Cash. 6. Debit Cash; credit Accounts Receivable. 7. Debit Tools and Equipment; credit Cash and Notes Payable. 8. Debit Accounts Payable; credit Cash. a. Indicate the effects of each transaction upon the elements of the income statement and the bal- ance sheet. Use the code letters I for increase. D for decrease, and NE for no effect. Organize your answer in tabular form using the column headings shown below. The answer for transac- tion 1 is provided as an example. Income Statement Balance Sheet LO3-4, L03-6, L03-7, L03-8 EXERCISE 3.8 Preparing Journal Entries for Revenue, Expenses, and Dividends Transaction Revenue - Expenses = Net Income Assets Liabilities + Owners' Equity D NE NE b. Write a one-sentence description of each transaction. D Shown as follows are selected transactions of the architectural firm of Baxter, Claxter, and Stone, Inc. April 5 Prepared building plans for Spangler Construction Company. Sent Spangler an invoice for $13,200 requesting payment within 30 days. (The appropriate revenue account is entitled Drafting Fees Earned.) May 17 May 29 Declared a cash dividend of $2.400. The dividend will not be paid until June 25. Received a $5,400 bill from Bob Needham, CPA, for accounting services performed during May. Payment is due by June 10. (The appropriate expense account is entitled Professional Expenses.) June 4 Received full payment from Spangler Construction Company for the invoice sent on April 5. June 10 Paid Bob Needham, CPA, for the bill received on May 29. June 25 Paid the cash dividend declared on May 17. a. Prepare journal entries to record the transactions in the firm's accounting records. b. Identify any of these transactions that will not result in a change in the company's net income.