Question

8. BONUS: Jerry Stevens is being trained in managerial accounting by his boss Sarah. For practice, Sarah has given Jerry nine accounting transactions that commonly occur in the foodservice industry. Sarah has asked Jerry to match the nine accounting transactions with the impact they will have on one more of the three components of the accounting equation. Help Jerry complete his work by placing the letter identifying the transaction in the "transaction" cell associated with the proper transaction's impact cell. a. A piece of Kitchen equipment is purchased for $1500. b. $2000 in cash is borrowed from a local bank. c. $10,000 is invested in the business by the owner. d. A note payable is created to repay an accounts payable (AP). e. An accounts payable amount owed to a vendor is paid in cash. f. A dividend is declared but not yet paid. g. Cash is withdrawn by the owner of the business. h. Long-term debt owed to a sole proprietor is converted to owners' equity. i. Preferred stock in a company is converted to common stock. Transaction Transaction Impact Increase an asset and increase an owners' equity account Decrease an asset and decrease an owners' equity account Increase an asset and increase a liability Decrease a liability and decrease an asset Increase one asset and decrease another asset Increase an owners' equity account and decrease another owners' equity account Increase a liability and decrease an owners' equity account Increase one liability and decrease another liability Decrease a liability and increase an owners' equity account

Answer 1

Transaction	Transaction Impact
$10,000 is invested in the business by the owner	Increase an asset and increase an owners' equity account
Cash is withdrawn by the owner of the business	Decrease an asset and decrease an owners' equity account
$2000 in cash is borrowed from a local bank	Increase an asset and increase a liability
An accounts payable amount owed to a vendor is paid in cash	Decrease a liability and decrease an asset
A piece of kitchen equipment is purchased for $1500	Increase one asset and decrease another asset
Preferred stock in a company is converted to common stock	Increase an owners' equity and decrease another owners' equity
A dividend is declared but not yet paid	Increase a liability and decrease an owners' equity
A note payable is created to repay an accounts payable (AP)	Increase one liability and decrease another liability
Long-term debt owed to a sole proprietor is converted to owners' equity	Decrease a liability and increase an owners' equity account