Discuss how the following affect Assets, Income, Liabilities, Common Stock and Retained Earnings on the end...

Discuss how the following affect Assets, Income, Liabilities, Common Stock and Retained Earnings on the end of 2019 financial statements (Increase by $x, Decreases by $x, or No Effect):

1. In June 2019, $1000 of gift cards were sold. At the end of the year 2019, $200 has not been redeemed.

2. On November 1st 2019, John paid $300 for a 12 month insurance policy, with it beginning on the same day, and he showed all of it as an expense.

3. The water bill for November 2019 was $100

4. On December 1st 2019, a consulting contract was signed for work in 2020, with the work starting in January 2020, and gets paid $10000 March 1st 2020.

5. A company pays employees on the first day of the month. This is for working the previous month. December 2019's salaries will be paid on Jan. 1st 2020 is $1200

Expert Solution

No.	Assets	=	Liabilities	+	Common stock	+	R/E	Income statement
1	NA	=	Decrease	+	NA	+	Increase	Increase
2	Increase	=	NA	+	NA	+	Increase	Increase
3	NA	=	Increase	+	NA	+	Decrease	Decrease
4	Increase	=	Increase	+	NA	+	NA	NA
5	NA	=	Increase	+	NA	+	Decrease	Decrease

workings

Entries for explanation

No.	Accounts	Debit	credit

1	Unearned revenue(L -)	800
	sales revenue(RE+,INCOME+)		800

2	Prepaid insurance(Asset +)	250
	Rent expense(RE + , Income +)		250
	(300-300/12*2)

3	Utiltiy expense (RE-,Income-)	100
	Accrued expense/Accounts payable(liability +)		100

4	Cash (Asset +)	10000
	Unearned revenue (liability +)		10000

5	Salaries expense(R/E - , income -)	1200
	salaries payable(liabilites +)		1200

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