Question

Briefly explain the impact (increase or decrease) these transactions would have on specific accounts in the income statement and balance sheet.

Date	Transaction
January 1	Borrowed $6,000 on a note payable. Interest rate of 7% is to be paid at the end of each month.
January 10	Purchased 10 GoPro cameras for $100 each on account. Payment to the supplier is due on February 9.
January 20	Sold 2 of those GoPro cameras for $175 each on account.
January 31	Sold gift cards totaling $2,000 for cash to customers.

Answer 1

Impact (increase or decrease) that these transactions would have on specific accounts in the income statement and balance sheet are as shown below:

Date	Transaction	Entry	Impact on Income Statement	Impact on Balance Sheet
Jan-01	Borrowed $6,000 on a note payable. Interest rate of 7% is to be paid at the end of each month.	Cash Dr Note Payable Cr	No impact	Current assets (Cash account) and current liabilities (Notes Payable) will increase by $6,000
Jan-10	Purchased 10 GoPro cameras for $100 each on account. Payment to the supplier is due on February 9.	Inventory Dr 1,000 Accounts payable Cr 1,000	No impact	Current assets (Inventory account) and current liabilities (Accounts Payable) will increase by $1,000
Jan-20	Sold 2 of those GoPro cameras for $175 each on account.	Account Receivable Dr Sales Cr, Cost of goods sold Dr Inventory Cr	Sales will increase by $350 and Cost of goods sold will increase by $200	Current assets (Account Receivable account) will increase by $359 and current assets (Inventory account) will decrease by $200. Retained earning account will increase by $150
Jan-31	Sold gift cards totaling $2,000 for cash to customers.	Cash Dr Sales Cr	Sales will increase by $2,000	Current assets (Cash account) will increase by $2,000. Retained earning account will increase by $2,000