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.

Solutions

Expert Solution

Accounting equation

Date

Assets

Liabilities

Owner's equity

Cash

Prepaid insurance

Common stock

Retained earnings

Revenue

Expenses

Aug 1

5,400

Aug 4

-1,860

1,860

Aug 16

900

Aug 27

-1,150

1,150

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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