Ch03 Transactions And Trial Balance 1

3-1

THE ACCOUNTING
INFORMATION
SYSTEM

3-2

Financial Accounting, Seventh Edition

3

Accounting
Accounting Transactions
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

3-3

+10,000

LO 1 Analyze the effect of business transactions on the basic accounting equation.

Accounting
Accounting Transactions
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
2. +5,000

3-4

+10,000
+5,000

LO 1 Analyze the effect of business transactions on the basic accounting equation.

Accounting
Accounting Transactions
Transactions
Event (3). On October 2, Sierra purchased equipment by paying $5,000 cash to Superior Equipment Sales Co.

1. +10,000
2. +5,000
3. -5,000

3-5

+10,000
+5,000
+5,000

LO 1 Analyze the effect of business transactions on the basic accounting equation.

Accounting
Accounting Transactions
Transactions
Event (4). On October 2, Sierra received a $1,200 cash advance from R. Knox, a client.

1. +10,000
2. +5,000
3. -5,000
4. +1,200

3-6

+10,000
+5,000
+5,000
+1,200

LO 1 Analyze the effect of business transactions on the basic accounting equation.

Accounting
Accounting Transactions
Transactions
Event (5). On October 3, Sierra received $10,000 in cash from Copa Company for guide services performed.

1. +10,000
2. +5,000
3. -5,000
4. +1,200
5. +10,000

3-7

+10,000
+5,000
+5,000
+1,200
+10,000

LO 1 Analyze the effect of business transactions on the basic accounting equation.

Accounting
Accounting Transactions
Transactions
Event (6). On October 3, Sierra Corporation paid its office rent for the month of
October in cash, $900.

1. +10,000
2. +5,000
3. -5,000
4. +1,200
5. +10,000
6.

3-8

-900

+10,000
+5,000
+5,000
+1,200
+10,000
-900

LO 1 Analyze the effect of business transactions on the basic accounting equation.

Accounting
Accounting Transactions
Transactions