Question 1.3: Transactions Salvo Delivery Service is owned and operated by......
Transactions
Salvo Delivery Service is owned and operated by Joel Salvo. The following selected transactions were completed by Salvo Delivery Service during February:
1. Received cash from owner as additional investment, $ 35,000.
2. Paid creditors on account, $ 1,800.
3. Billed customers for delivery services on account, $ 11,250.
4. Received cash from customers on account, $ 6,740.
5. Paid cash to owner for personal use, $ 1,000.
Indicate the effect of each transaction on the accounting equation elements (Assets, Liabilities, Owner’s Equity, Drawing, Revenue, and Expense). Also, indicate the specific item within the accounting equation element that is affected. To illustrate, the answer to (1) is shown below.
(1) Asset (Cash) increases by $ 35,000; Owner’s Equity (Joel Salvo, Capital) increases by $ 35,000.
(2) Asset (Cash) decreases by $ 1,800; Liability (Accounts Payable) decreases by $ 1,800.
(3) Asset (Accounts Receivable) increases by $ 11,250; Revenue (Delivery Service Fees) increases by $ 11,250.
(4) Asset (Cash) increases by $ 6,740; Asset (Accounts Receivable) decreases by $ 6,740.
(5) Asset (Cash) decreases by $ 1,000; Drawing (Joel Salvo, Drawing) increases by $ 1,000.