You are to state what will increase and/or decrease in each of the transactions described below. 1) Mythical Services sold $500 of legal services on account. 2) Mythical collected the $500 from transaction nmuber 1 above 3) Mythical purchased office furniture on account in the amount of $4,000. 4) Mythical paid the $4,000 in transaction numner 3.

Sales 500
Account recievable 500
(to record the sale of services on credit)

Cash 500
Account recievable 500
(to record the reciept of cash)

Office furniture 4000
Account Payable 4000
(to record the purchase of Office furniture on credit)

Account Payable 4000
Cash 4000
(to record the payment of liability)

1) In transaction number 1, the sale of $500 of legal services on account would increase the Sales account and the Accounts Receivable account.

2) In transaction number 2, the collection of $500 from transaction number 1 would increase the Cash account and decrease the Accounts Receivable account.

3) In transaction number 3, the purchase of office furniture on account in the amount of $4,000 would increase the Office Furniture account and increase the Accounts Payable account.

4) In transaction number 4, the payment of $4,000 in transaction number 3 would decrease the Accounts Payable account and decrease the Cash account.