3. Zedingil Enterprises had the ff selected transactions.
1. Zedingil invested 5000 cash in the business in exchange for ordinary shares.
2. Paid office rent of 1100.
3. Performed consulting services and billed a client 4700.
4. Declared and paid a 700 cash dividend.
Instructions.
(a) indicate the effect each transaction has on the accounting equation (Asset, Liability, Equity), using plus or minus signs.
(b) journalize each transaction. (omit explanations.)
(a)
1. Zedingil invested 5000 cash in the business in exchange for ordinary shares.
Effects on accounting equation:
- Increase in Assets (+ Cash)
- Increase in Equity (+ Common Stock)
2. Paid office rent of 1100.
Effects on accounting equation:
- Decrease in Assets (- Cash)
- Decrease in Equity (-)
3. Performed consulting services and billed a client 4700.
Effects on accounting equation:
- Increase in Assets (+ Accounts Receivable)
- Increase in Equity (+)
4. Declared and paid a 700 cash dividend.
Effects on accounting equation:
- Decrease in Assets (- Cash)
- Decrease in Equity (- Retained Earnings)
(b) Journal entries:
1. Cash 5000
Common Stock 5000
2. Rent Expense 1100
Cash 1100
3. Accounts Receivable 4700
Service Revenue 4700
4. Dividends 700
Cash 700