Question

Analyze each transaction.  Under each category in the accounting equation, indicate whether the transaction:

A. increases,

B. decreases, or

C. has no effect.  The item (a) is provided as an example.

1. Provided services to a customer on account.  (Revenue increases causing Stockholders’ Equity to increase, Assets increase, and no effect on Liabilities).

6.  Collected from customers for services provided on account.

7.  Incurred salaries for the month, will pay next week.

8.  Purchased office equipment and will pay vendor later.

	Asset	Liability	Stockholders’ Equity
(a)	A	C	A
6.
7.
8.

9.     At the beginning of January, the balance in the Retained Earnings account is $210,000 for BMJ Corporation.  During the month of January, BMJ had the following external transactions.

(a)	Pay rent for the month	$5,000
(b)	Provide services to customers in exchange for cash	150,000
(c)	Provide services to customers on account	80,000
(d)	Issue common stock for cash	100,000
(e)	Purchase equipment and pay cash	125,000
(f)	Pay workers' salaries for the month	140,000
(g)	Pay dividends to stockholders	40,000

$______________Determine ending Retained Earnings for January 31st.

Answer 1