Transaction and Adjusting journal entries and affect on Accounting Equation Assignment 72 points Instructions:

Indicate in the True/False column, whether the journal entry is correct (True) or not correct (False).

For the journal entries that are not correct (False), rewrite the correct journal entry. In addition, for each entry (using the correct journal entry), indicate the affect on each category of the accounting equation by selecting from the following:

I = increase D= decrease NC= no change True/False Correct journal entry (if nec) Assets = Liablities + Stockholders' Equity

1 Paid off a note payable of $5000 at the maturity date

Notes Payable 5000 Cash 5000

2 Income taxes of $100 are paid for the year

Income Tax Expense 100 Cash 100

3 Received $1,500 for services to be performed next accounting period.

Cash 1500 Unearned Revenue 1500

4 Record a sale on account for $50

Accounts Receivable 50 Sales Revenue 50

5 Purchased a new computer for $300

Equipment/Computer 300 Cash 300

6 The company paid $4,800, which will cover its rent for the next six months. At the end of the first month, record the adjusting entry.

Rent Expense 800 Prepaid Rent 800

7 Purchased inventoy on account for $150 (perpetual inventory system)

Inventory 150 Accounts Payable 150

8 Received a $200 utility bill for this month's utilities, but it will not be paid until next month.

Utilities Expense 200 Accounts Payable 200 or Utilities Payable

9 Record the borrrowing of $18,000 for 6-months at 5%.

Cash 18000 Notes Payable 18000

10 Record the interest incurred at the end of the first month in #9 above

Interest Expense 75 Interest Payable 75

11 Prepaid $20,000 for hotel rooms for the company's sales meeting next accounting period

Cash 20,000 Prepaid Expenses 20,000

12 Declared and paid a $5000 cash dividend

Cash 5000 Dividends 5000