Mishal Mustafa

BTA111
Prof. Wu

Exercise Chapter One

E1-5 Diehl Cleaners has the following balance sheet items.

Classify each item as an asset, liability, or owner’s equity.

1. Accounts payable Liability

2. Accounts receivable Asset

3. Cash Asset

4. Notes payable Liability

5. Equipment Asset

6. Salaries and wages payable Liability

7. Supplies Asset

8. Owner’s capital Owner’s Equity

E1-6 Selected transactions for Green Valley Lawn Care Company are listed below.

List the numbers of the above transactions and describe the effect of each transaction on

assets, liabilities, and owner’s equity. For example, the first answer is: (1) Increase in assets

and increase in owner’s equity.

1. Made cash investment to start business. Increase in assets and increase in owner’s

equity

2. Paid monthly rent. Decrease in assets and decrease in owner’s equity

3. Purchased equipment on account. Increase in assets and increase in liabilities

4. Billed customers for services performed. Increase in assets and increase in owner’s

equity

5. Withdrew cash for owner’s personal use. Decrease in assets and decrease in owner’s

equity

6. Received cash from customers billed in (4). Increase in assets and decrease in assets

7. Incurred advertising expense on account. Increase in liabilities and decrease in owner’s

equity

8. Purchased additional equipment for cash. Increase in assets and decrease in assets

9. Received cash from customers when service was performed. Increase in assets and

increase in owner’s equity

E1.5

Diehl Cleaners

Balance Sheet

Assets

Cash

Equipment

Supplies

Accounts Receivable

Total Assets:

Liabilities/Owners Equity

Liabilities

Accounts Payable

Notes Payable

Salaries and Wages Payable

Owner’s Equity

Owner’s Capital

Total Liabilities/Owner’s Equity:

E1.6

Increase assets and increase owner's equity

Decrease assets and decrease owner's equity

Increase assets and increase liabilities

Increase assets and increase owner's equity

Decrease assets and decrease owner's equity

Increase and decrease assets

Increase liabilities and decrease owner's equity

Decrease and increase assets

Increase assets and increase owner's equity