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3-2 THE ACCOUNTING INFORMATION SYSTEM Financial Accounting, Seventh Edition 3

3-3 Event (1). On October 1, cash of $10,000 is invested in Sierra Corporation by investors in exchange for $10,000 of common stock. Accounting Transactions 1.+10,000+10,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

3-4 Event (2). On October 1, Sierra borrowed $5,000 from Castle Bank by signing a 3-month, 12%, $5,000 note payable. Accounting Transactions 1.+10,000+10, ,000+5,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

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

3-6 Event (4). On October 2, Sierra received a $1,200 cash advance from R. Knox, a client. Accounting Transactions 4.+1,200+1, ,000+5, ,000+10, ,000+5,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

3-7 Event (5). On October 3, Sierra received $10,000 in cash from Copa Company for guide services performed. Accounting Transactions 4.+1,200+1, ,000+10, ,000+5, ,000+10, ,000+5,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

3-8 Event (6). On October 3, Sierra Corporation paid its office rent for the month of October in cash, $900. Accounting Transactions 4.+1,200+1, ,000+10, ,000+5, ,000+10, ,000+5,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

3-9 Event (7). On October 4, Sierra paid $600 for a one-year insurance policy that will expire next year on September 30. Accounting Transactions 4.+1,200+1, ,000+10, ,000+5, ,000+10, ,000+5,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

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

3-11 Event (9). On October 9, Sierra hired four new employees to begin work on October 15. Accounting Transactions 4.+1,200+1, ,000+10, ,500+2, ,000+5, ,000+10, ,000+5,000 LO 1 Analyze the effect of business transactions on the basic accounting equation. An accounting transaction has not occurred.

3-12 Event (10). On October 20, Sierra paid a $500 dividend. Accounting Transactions 4.+1,200+1, ,000+10, ,500+2, ,000+5, ,000+10, ,000+5,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

3-13 Event (11). Employees have worked two weeks, earning $4,000 in salaries, which were paid on October 26. Accounting Transactions 4.+1,200+1, ,000+10, ,500+2, ,000-4, ,000+5, ,000+10, ,000+5,000

3-14 The Trial Balance Illustration 3-34 Equal LO 8

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