Financial Accounting, Seventh Edition 3 THE ACCOUNTING INFORMATION SYSTEM Financial Accounting, Seventh Edition

Accounting Transactions Event (1). On October 1, cash of $10,000 is invested in Sierra Corporation by investors in exchange for $10,000 of common stock. 1. +10,000 +10,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

Accounting Transactions Event (2). On October 1, Sierra borrowed $5,000 from Castle Bank by signing a 3-month, 12%, $5,000 note payable. 1. +10,000 +10,000 2. +5,000 +5,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

Accounting Transactions Event (3). On October 2, Sierra purchased equipment by paying $5,000 cash to Superior Equipment Sales Co. 1. +10,000 +10,000 2. +5,000 +5,000 3. -5,000 +5,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

Accounting Transactions Event (4). On October 2, Sierra received a $1,200 cash advance from R. Knox, a client. 1. +10,000 +10,000 2. +5,000 +5,000 3. -5,000 +5,000 4. +1,200 +1,200 LO 1 Analyze the effect of business transactions on the basic accounting equation.

Accounting Transactions Event (5). On October 3, Sierra received $10,000 in cash from Copa Company for guide services performed. 1. +10,000 +10,000 2. +5,000 +5,000 3. -5,000 +5,000 4. +1,200 +1,200 5. +10,000 +10,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

Accounting Transactions Event (6). On October 3, Sierra Corporation paid its office rent for the month of October in cash, $900. 1. +10,000 +10,000 2. +5,000 +5,000 3. -5,000 +5,000 4. +1,200 +1,200 5. +10,000 +10,000 6. -900 -900 LO 1 Analyze the effect of business transactions on the basic accounting equation.

Accounting Transactions Event (7). On October 4, Sierra paid $600 for a one-year insurance policy that will expire next year on September 30. 1. +10,000 +10,000 2. +5,000 +5,000 3. -5,000 +5,000 4. +1,200 +1,200 5. +10,000 +10,000 6. -900 -900 7. -600 +600 LO 1 Analyze the effect of business transactions on the basic accounting equation.

Accounting Transactions Event (8). On October 5, Sierra purchased an estimated three months of supplies on account from Aero Supply for $2,500. 1. +10,000 +10,000 2. +5,000 +5,000 3. -5,000 +5,000 4. +1,200 +1,200 5. +10,000 +10,000 6. -900 -900 7. -600 +600 8. +2,500 +2,500 LO 1 Analyze the effect of business transactions on the basic accounting equation.

Accounting Transactions Event (9). On October 9, Sierra hired four new employees to begin work on October 15. 1. +10,000 +10,000 2. +5,000 +5,000 3. -5,000 +5,000 4. +1,200 +1,200 5. +10,000 +10,000 6. -900 -900 7. -600 +600 8. +2,500 +2,500 An accounting transaction has not occurred. LO 1 Analyze the effect of business transactions on the basic accounting equation.

Accounting Transactions Event (10). On October 20, Sierra paid a $500 dividend. 1. +10,000 +10,000 2. +5,000 +5,000 3. -5,000 +5,000 4. +1,200 +1,200 5. +10,000 +10,000 6. -900 -900 7. -600 +600 8. +2,500 +2,500 10. -500 -500 LO 1 Analyze the effect of business transactions on the basic accounting equation.

Accounting Transactions Event (11). Employees have worked two weeks, earning $4,000 in salaries, which were paid on October 26. 1. +10,000 +10,000 2. +5,000 +5,000 3. -5,000 +5,000 4. +1,200 +1,200 5. +10,000 +10,000 6. -900 -900 7. -600 +600 8. +2,500 +2,500 10. -500 -500 11. -4,000 -4,000

The Trial Balance Illustration 3-34 Equal LO 8

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