Question

Exercise 4-11A Determining the effect of i1111e11t o 1J1 t ransactions 011 th e accounting equation: Perpetual system Lopez Company experie nced the following events: I. Purchased merchandise inventory on account. 2. Purchased merchandise inventory for cash. 3. Sold merchandise inventory on account. Label the revenue recognit io n 3a and the expense recognition 3b. 4. Retu rned merchandise purchased on accoun t. 5. Sold me rchandise inventory for cas h. Label the revenue recogniti o n 5a and the expe nse rec- ognition Sb. 6. Paid cas h on acco unts payable within the disco unt period. 7. Paid cas h for selling and administrative expenses. 8. Collected cash from accounts receivable not within the disco unt perio d. 9. Paid cash for transpo rtatio n-out. 10. Paid cash for transpo rtatio n-in. Required Identi fy each event as asset source (AS), asset use (AU) . asset excha nge(AE). or claims exchange (CE). Also e xpla in how eac h

eve nt a!Tec ts the financial s tat ements by placing a + for in c rease - for decrease,or NA for not a!Tec ted under each of the co mponents in the follow ing sta tements model. Assume the co mpany uses the perpetual invento ry system. Th e first eve nt is recorded as an ex ampl e. Event Event No. Type AS Assets Liab. + Equity Rev. Exp. = Net Inc. Cash Flow + + + NA NA NA NA NA

Answer 1

Event No.

Event Type

Assets

=

Liab.

+

Equity

Rev.

-

Exp.

=

Net Inc.

Cash Flow

1

AS

+

+

NA

2

AE

+ -

NA

3 a.

AS

+

+

OA

3 b.

AU

-

+

OA

4 a.

CE

-

-

OA

4 b.

AS

+

-

OA

5 a.

AS

+

+

OA

5 b.

AU

-

+

OA

6

AU

-

-

-

OA

7

AU

-

+

OA

8

AE

+ -

NA

9

AU

-

+

OA

10

AU

-

+

OA