Impact of a Transaction

The company borrowed $85,000 in cash from Eastern Bank.
a. List the accounts impacted by the transaction.
b. For each account, indicate whether the transaction increased or decreased the account.
c. For each account, indicate how much the transaction increased or decreased the
account.
d. Compute the impact of the transaction on total assets, total liabilities, and total owners’ equity

How do i fiqure this out?

To figure out the impact of the transaction, you can follow these steps:

Step 1: Identify the accounts impacted by the transaction:
In this case, the transaction is borrowing $85,000 in cash from Eastern Bank. The two accounts impacted by this transaction are Cash and Notes Payable.

Step 2: Determine whether the transaction increases or decreases each account:
The transaction involves borrowing cash, which means an increase in the Cash account. On the other hand, borrowing creates a liability, specifically Notes Payable, so it increases as well.

Step 3: Determine how much each account is increased or decreased:
In this case, the transaction involves borrowing $85,000, so Cash increases by $85,000, and Notes Payable also increases by $85,000.

Step 4: Calculate the impact on total assets, total liabilities, and total owner's equity:
- Total Assets: Cash has increased by $85,000, so total assets increase by $85,000.
- Total Liabilities: Notes Payable has increased by $85,000, so total liabilities increase by $85,000.
- Total Owner's Equity: Since the transaction does not directly impact owner's equity, it remains unchanged.

To summarize:
a. The accounts impacted by the transaction are Cash and Notes Payable.
b. The transaction increases both the Cash and Notes Payable accounts.
c. The transaction increases both the Cash and Notes Payable accounts by $85,000.
d. The impact on total assets is an increase of $85,000, the impact on total liabilities is an increase of $85,000, and there is no impact on total owner's equity.