Question 1

Apply the template approach by using the template provided. Identify the accounts affected in the following transactions and the impact on each account by indicating an "increase" or "decrease". Assess the impact on any revenue, expense or dividend transactions based on the impact on retained earnings. The first transaction has been provided as an example.

1. The company borrowed $207,000 by taking out a bank loan.

2. Purchased equipment for $94,000, paying half with cash and issuing a note payable for the remainder.

3. Purchase $48,000 of inventory on account.

4. Sale of merchandise for cash of $5,800. The cost of the goods sold amount to $1,200.

5. Paid a supplier $48,000 in settlement of its accounts payable.

6. Declared and paid cash dividends totalling $48,000.

2. 3. 4. 5. 6