motor cross delivery service is owned and operated by jim smith the following select 551112

PE 1-3B Transactions

Motor-cross Delivery Service is owned and operated by Jim Smith. The following selected transactions were completed by Motor-cross Delivery Service during February:

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1. Received cash from owner as additional investment, $30,000.

2. Paid advertising expense, $1,200.

3. Purchased supplies on account, $450.

4. Billed customers for delivery services on account, $7,500.

5. Received cash from customers on account, $4,900.

Indicate the effect of each transaction on the accounting equation elements (Assets, Liabilities, Owner’s Equity, Drawing, Revenue, and Expense). Also, indicate the specific item within the accounting equation element that is affected. To illustrate, the answer to (1) is shown below.

(1) Asset (Cash) increases by $30,000; Owner’s Equity (Jim Smith, Capital) increases by $30,000.

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