Question

In: Accounting

Metlock, Inc. has the following transactions during August of the current year. Indicate (a) the effect...

Metlock, Inc. has the following transactions during August of the current year.

Indicate (a) the effect on the accounting equation and (b) the debit-credit analysis.

Aug. 1		Opens an office as a financial advisor, investing $5,400 in cash in exchange for common stock.
4		Pays insurance in advance for 6 months, $1,860 cash.
16		Receives $900 from clients for services performed.
27		Pays secretary $1,150 salary.

Expert Solution

a.

Accounting equation

Date

Assets

=

Liabilities

+

Owner's equity

Cash

+

Prepaid insurance

=

+

Common stock

+

Retained earnings

=

Revenue

-

Expenses

Aug 1

5,400

+

=

+

5,400

+

=

-

Aug 4

-1,860

+

1,860

=

+

=

-

Aug 16

900

+

=

+

900

=

900

-

Aug 27

-1,150

+

=

+

-1,150

=

-

1,150

b.

Debit credit analysis

Aug 1	Debit - Cash	Credit - Common stock
Aug 4	Debit - Prepaid insurance	Credit - Cash
Aug 16	Debit - Cash	Credit - Service revenue
Aug 27	Debit - Salary expenses	Credit - Cash

ekkarill92 answered 2 years ago

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