The following events occurred for Parker Company.
a. Performed consulting services for a client in exchange for $1,200 cash
b. Performed consulting services for a client on account, $700
c. Paid $5,000 cash for land
d. Purchased office supplies on account, $300
e. Paid a $1,000 cash dividend to stockholders
f. Paid $250 on account for supplies purchased in transaction d
g. Paid $200 cash for the current month’s rent
h. Collected $500 from client in transaction b
i. Stockholders invested $12,000 cash in the business
Required:
1. Analyze the effect of each transaction on p. 91 on the accounting equation. For example, if salaries of $500 were paid, the answer would be ‘‘Decrease in stockholders’ equity (expense) $500 and decrease in assets (cash) $500.’’
2. For d, what accounting principle did you use to determine the amount to be recorded for supplies?