Question

Check my work The Marchetti Soup Company entered into the following transactions during the month of June: (1) purchased inventory on account for $195,000 (assume Marchetti uses a perpetual inventory system); (2) paid $50,000 in salaries to employees for work performed during the month; (3) sold merchandise that cost $140,000 to credit customers for $250,000; (4) collected $230,000 in cash from credit customers, and (5) paid suppliers of inventory $175,000. points Analyze each transaction and show the effect of each on the accounting equation for a corporation. (Amounts to be deducted should be indicated by a minus sign. Enter the net change on the accounting equation.) eBook = Liabilities + + Retained Earnings Assets 195,000 Paid-in capital 195,000 (1) S Print

Answer 1

Assets

=

Liabilities

+

Paid In Capital

+

Retained Earnings

1)

$           1,95,000

=

$           1,95,000

+

+

(inventory increased,account payable increased)

2)

$             -50,000

=

+

+

$                 -50,000

(cash decreased, Expenses increased)

3)

$           1,10,000

=

+

+

$               1,10,000

(inventory decreased & account payable increased 250000-140000, Retained Earning Increased)

4)

$                        -

=

+

+

(increased cash & decreased Account receivables , both are the assets hence effect would be nil)

5)

$         -1,75,000

=

$         -1,75,000

+

+

(decreased in cash, decreased in account payable)