Below is a list of activities for Jayhawk Corporation. Required: Select from the activities of Jayhawk Corporation whether the transaction increases, decreases, or has no effect on assets, liabilities, and stockholders' equity. The first item is provided as an example.
Transaction Assets = Liabilities+ Stockholders' Equity
1. Issue common stock in exchange for cash. Increase= No effect+ Increase
2. Purchase business supplies on account. = +
3. Pay for legal services for the current month. = +
4. Provide services to customers on account. = +
5. Pay employee salaries for the current month. = +
6. Provide services to customers for cash. = +
7. Pay for advertising for the current month. = +
8. Repay loan from the bank. = +
9. Pay dividends to stockholders. = +
10. Receive cash from customers in (4) above. = +
11. Pay for supplies purchased in (2) above. = +

The accounting equation states that Assets are equal to Liabilities Plus Equity. This equation remains true for every business transaction, which affects two accounts on either side of the equation. This keeps the equation in equilibrium or balance with each given transaction. It is from this equation that the double entry system of accounting was developed and is based.

andromache andromache · Answer 2 · 2022-02-03T14:43:12+01:00

The impact whether the transaction increases, decreases, or has no effect on assets, liabilities, and stockholders' equity is explained below:

1. Issue common stock in exchange for cash. Increase= No effect + Increase

2. Purchase business supplies on account. Increase = Increase + No effect

3. Pay for legal services for the current month. Decrease = No effect + Decrease

4. Provide services to customers on account. Increase = No effect + Increase

5. Pay employee salaries for the current month. Decrease = No effect + Decrease

6. Provide services to customers for cash. Increase = No effect + Increase

7. Pay for advertising for the current month. Decrease = No effect + Decrease

8. Repay loan from the bank. Decrease = Decrease + No effect

9. Pay dividends to stockholders. Decrease = No effect + Decrease

10. Receive cash from customers in (4) above. Increase + Decrease = No effect + No effect

11. Pay for supplies purchased in (2) above. Decrease = Decrease + No effect

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