Problem 1d: Accounting Equation: Effects of Transactions
Hayes' Consulting, Inc. engaged in the following transactions in July. By addition and
subtraction, show the effects of the transactions on Hayes' Consulting, Inc.'s resources
and sources of resources. Notice that the first transaction has been processed for you.
Jeff Hayes invested $5,000 in Hayes' Consulting, Inc. Jeff received 5,000 shares of $1
par common stock in return for his investment.
Total
Resources
Total
Sources of Resources
+ $5,000
+ $5,000
The company’s receipt of cash increased its resources. The company now has $5,000
more resources (cash) than it had before it received the cash. Since the company did not
give up any resources to receive the cash, but received the cash from the owner, the
company’s sources of resources (common stock) increased by $5,000.
1. Hayes' Consulting provided $1,000 of consulting services to a customer. The
customer did not pay cash for the services, but agreed to pay cash within the next 30
days.
Total
Resources
Total
Sources of Resources
A)
+ $1,000
+ $1,000
B)
- $1,000
- $1,000
C)
+ $1,000
- $1,000
D)
- $1,000
+ $1,000
E)
+ $1,000 & - $1,000
+ $0
2
2. Hayes' Consulting paid $300 to Barbara Borsa for assistance in providing services on
the consulting project mentioned in part 1 above. (In part 1, Hayes' Consulting had
provided $1,000 of consulting services to a customer. The customer did not pay cash
for the services, but agreed to pay cash within the next 30 days.)
Total
Resources
Total
Sources of Resources
A)
+ $300 & - $300
+ $0
B)
+ $300
+ $300
C)
- $300
- $300
D)
+ $300
- $300
E)
- $300
+ $300
3. Hayes' Consulting purchased $200 of supplies. No cash was paid for the supplies, but
Hayes' Consulting agreed to pay cash within the next 30 days.
Total
Resources
Total
Sources of Resources
A)
- $200
+ $200
B)
+ $200 & - $200
+ $0
C)
+ $200
- $200
D)
- $200
- $200
E)
+ $200
+ $200
3
4. Hayes' Consulting provided $800 of consulting services to a customer who paid cash
for the services.
Total
Resources
Total
Sources of Resources
A)
+ $800
- $800
B)
- $800
+ $800
C)
+ $800 & - $800
+ $0
D)
+ $800
+ $800
E)
- $800
- $800
5. $750 cash was received from the customer mentioned in part 1 above. The remaining
$250 will be paid by the customer next week. (In part 1, Hayes' Consulting had
provided $1,000 of consulting services to a customer. The customer did not pay cash
for the services, but agreed to pay cash within the next 30 days.)
Total
Resources
Total
Sources of Resources
A)
- $750
- $750
B)
+ $750
- $750
C)
- $750
+ $750
D)
+ $750 & - $750
+ $0
E)
+ $750
+ $750
4
6. Hayes' Consulting paid cash for one-half of the supplies purchased in part 3 above.
The company will pay the remaining amount due next month. (In part 3, Hayes'
Consulting had purchased $200 of supplies. No cash was paid for the supplies, but
Hayes' Consulting agreed to pay cash within the next 30 days.)
Total
Resources
Total
Sources of Resources
A)
+ $100
+ $100
B)
- $100
- $100
C)
+ $100
- $100
D)
- $100
+ $100
E)
+ $200 & - $200
+ $0
7. Hayes' Consulting paid the phone bill for $30 of telephone services used during July.
Total
Resources
Total
Sources of Resources
A)
+ $30 & - $30
+ $0
B)
+ $30
+ $30
C)
- $30
- $30
D)
+ $30
- $30
E)
- $30
+ $30
5
8. Hayes' Consulting declared and paid a $50 cash dividend.
Total
Resources
Total
Sources of Resources
A)
- $50
+ $50
B)
+ $50 & - $50
+ $0
C)
+ $50
+ $50
D)
- $50
- $50
E)
+ $50
- $50
By addition and subtraction, show the effects of the transactions on the accounting
equation of Hayes' Consulting, Inc. Notice that the first transaction has been processed
for you.
Jeff Hayes invested $5,000 in Hayes' Consulting, Inc. Jeff received 5,000 shares of $1
par common stock in return for his investment.
Cash
Total Resources
Assets
Accounts
Receivable Supplies
+ $5,000
Sources of
Borrowed
Resources
Liabilities
Accounts
Payable
Sources of
Sources of
Owner
Management
Invested
Generated
Resources
Resources
Stockholders’ Equity
Common
Retained
Stock
Earnings
+ $5,000
The company’s receipt of cash increased its cash by $5,000. Since the company received
the cash from the owner in return for shares of the company’s common stock, the
company’s common stock also increased by $5,000.
6
9. Hayes' Consulting provided $1,000 of consulting services to a customer. The
customer did not pay cash for the services, but agreed to pay cash within the next 30
days.
Cash
A)
+ $1,000
B)
C)
Total Resources
Assets
Accounts
Receivable Supplies
Sources of
Borrowed
Resources
Liabilities
Accounts
Payable
+ $1,000
+ $1,000
+ $1,000
Sources of
Sources of
Owner
Management
Invested
Generated
Resources
Resources
Stockholders’ Equity
Common
Retained
Stock
Earnings
+ $1,000
- $1,000
D)
+ $1,000
E)
+ $1,000
+ $1,000
+ $1,000
10. Hayes' Consulting paid $300 to Barbara Borsa for assistance in providing services on
the consulting project mentioned in part 9 above. (In part 9, Hayes' Consulting had
provided $1,000 of consulting services to a customer. The customer did not pay cash
for the services, but agreed to pay cash within the next 30 days.)
Cash
A)
- $300
B)
- $300
C)
- $300
D)
- $300
E)
Total Resources
Assets
Accounts
Receivable Supplies
Sources of
Borrowed
Resources
Liabilities
Accounts
Payable
Sources of
Sources of
Owner
Management
Invested
Generated
Resources
Resources
Stockholders’ Equity
Common
Retained
Stock
Earnings
- $300
- $300
+ $300
+ $300
+ $300
- $300
7
11. Hayes' Consulting purchased $200 of supplies. No cash was paid for the supplies, but
Hayes' Consulting agreed to pay cash within the next 30 days.
Cash
Total Resources
Assets
Accounts
Receivable Supplies
A)
B)
+ $200
- $200
C)
Sources of
Borrowed
Resources
Liabilities
Accounts
Payable
Sources of
Sources of
Owner
Management
Invested
Generated
Resources
Resources
Stockholders’ Equity
Common
Retained
Stock
Earnings
+ $200
+ $200
- $200
+ $200
D)
+ $200
E)
+ $200
+ $200
+ $200
12. Hayes' Consulting provided $800 of consulting services to a customer who paid cash
for the services.
Cash
A)
+ $800
B)
+ $800
C)
Total Resources
Assets
Accounts
Receivable Supplies
+ $800
- $800
+ $800
D)
+ $800
E)
+ $800
Sources of
Borrowed
Resources
Liabilities
Accounts
Payable
Sources of
Sources of
Owner
Management
Invested
Generated
Resources
Resources
Stockholders’ Equity
Common
Retained
Stock
Earnings
+ $800
+ $800
- $800
8
13. $750 cash was received from the customer mentioned in part 9 above. The remaining
$250 will be paid by the customer next week. (In part 9, Hayes' Consulting had
provided $1,000 of consulting services to a customer. The customer did not pay cash
for the services, but agreed to pay cash within the next 30 days.)
Cash
A)
Total Resources
Assets
Accounts
Receivable Supplies
+ $750
+ $750
C)
+ $750
D)
+ $750
+ $750
Sources of
Sources of
Owner
Management
Invested
Generated
Resources
Resources
Stockholders’ Equity
Common
Retained
Stock
Earnings
+ $750
B)
E)
Sources of
Borrowed
Resources
Liabilities
Accounts
Payable
+ $750
+ $750
+ $750
- $750
14. Hayes' Consulting paid cash for one-half of the supplies purchased in part 11 above.
The company will pay the remaining amount due next month. (In part 11, Hayes'
Consulting had purchased $200 of supplies. No cash was paid for the supplies, but
Hayes' Consulting agreed to pay cash within the next 30 days.)
Cash
A)
- $100
B)
- $100
C)
- $100
D)
E)
Total Resources
Assets
Accounts
Receivable Supplies
Sources of
Sources of
Owner
Management
Invested
Generated
Resources
Resources
Stockholders’ Equity
Common
Retained
Stock
Earnings
- $100
+ $100
- $100
- $100
- $100
Sources of
Borrowed
Resources
Liabilities
Accounts
Payable
- $100
+ $100
9
15. Hayes' Consulting paid the phone bill for $30 of telephone services used during July.
Cash
A)
- $30
B)
- $30
C)
- $30
D)
- $30
Total Resources
Assets
Accounts
Receivable Supplies
Sources of
Borrowed
Resources
Liabilities
Accounts
Payable
Sources of
Sources of
Owner
Management
Invested
Generated
Resources
Resources
Stockholders’ Equity
Common
Retained
Stock
Earnings
- $30
+ $30
- $30
+ $30
E)
+ $30
- $30
16. Hayes' Consulting declared and paid a $50 cash dividend.
Cash
A)
- $50
B)
- $50
C)
- $50
D)
- $50
E)
Total Resources
Assets
Accounts
Receivable Supplies
Sources of
Borrowed
Resources
Liabilities
Accounts
Payable
Sources of
Sources of
Owner
Management
Invested
Generated
Resources
Resources
Stockholders’ Equity
Common
Retained
Stock
Earnings
- $50
- $50
- $50
+ $50
+ $50
- $50
10
17. At the end of July, the Hayes’ Consulting, Inc.’s accounting system showed the
following amounts: cash = $6,070, accounts receivable = $250, supplies = $200,
accounts payable = $100, common stock = $5,000, and retained earnings = $1,420.
The retained earnings amount was based on the following: resources resulting from
services provided to customers = $1,800, resources used up to provide services to
customers = $330, and dividends = $50. Determine the dollar amount of Hayes'
Consulting, Inc.'s total resources at the end of July.
A)
B)
C)
D)
E)
$6,070
$6,520
$100
$6,420
$1,470
18. At the end of July, the Hayes’ Consulting, Inc.’s accounting system showed the
following amounts: cash = $6,070, accounts receivable = $250, supplies = $200,
accounts payable = $100, common stock = $5,000, and retained earnings = $1,420.
The retained earnings amount was based on the following: resources resulting from
services provided to customers = $1,800, resources used up to provide services to
customers = $330, and dividends = $50. Determine the dollar amount of resources on
hand at the end of July that Hayes' Consulting, Inc. obtained through borrowing.
A)
B)
C)
D)
E)
$6,520
$6,070
$5,000
$100
$1,470
19. At the end of July, the Hayes’ Consulting, Inc.’s accounting system showed the
following amounts: cash = $6,070, accounts receivable = $250, supplies = $200,
accounts payable = $100, common stock = $5,000, and retained earnings = $1,420.
The retained earnings amount was based on the following: resources resulting from
services provided to customers = $1,800, resources used up to provide services to
customers = $330, and dividends = $50. Determine the dollar amount of resources on
hand at the end of July that Hayes' Consulting, Inc. obtained through the owner’s
investments.
A)
B)
C)
D)
E)
$5,000
$6,420
$1,470
$100
$6,520
11
20. At the end of July, the Hayes’ Consulting, Inc.’s accounting system showed the
following amounts: cash = $6,070, accounts receivable = $250, supplies = $200,
accounts payable = $100, common stock = $5,000, and retained earnings = $1,420.
The retained earnings amount was based on the following: resources resulting from
services provided to customers = $1,800, resources used up to provide services to
customers = $330, and dividends = $50. Determine the Hayes' Consulting, Inc.'s net
income for July.
A)
B)
C)
D)
E)
$1,800
$330
$1,420
$250
$1,470
21. At the end of July, the Hayes’ Consulting, Inc.’s accounting system showed the
following amounts: Cash = $6,070, accounts receivable = $250, supplies = $200,
accounts payable = $100, common stock = $5,000, and retained earnings = $1,420.
The retained earnings amount was based on the following: net income = $1,470 and
dividends = $50. Determine the net dollar amount of resources that Hayes'
Consulting, Inc. generated through management operations in July.
A)
B)
C)
D)
E)
$1,420
$250
$1,470
$1,800
$330
22. At the end of July, the Hayes’ Consulting, Inc.’s accounting system showed the
following amounts: Cash = $6,070, accounts receivable = $250, supplies = $200,
accounts payable = $100, common stock = $5,000, and retained earnings = $1,420.
The retained earnings amount was based on the following: net income = $1,470 and
dividends = $50. Determine the dollar amount of resources on hand at the end of July
that Hayes' Consulting, Inc. obtained through management operations and kept in the
company.
A)
B)
C)
D)
E)
$1,470
$1,420
$6,520
$5,000
$6,420