Journal entries and the accounting equation
Below are several transactions entered into by Vulcan Metal Corporation during 2012. Unless otherwise noted, all transactions involve cash.
- Purchased equipment for $150,
- Paid employees $30,000 in wages.
- Collected $15,000 from customers as payments on open accounts.
- Provided services for $24,000: $16,000 received in cash and the remainder on open account.
- Paid $50,000 on an outstanding note payable: $10,000 for interest and $40,000 to reduce the principal.
- Purchased a one-month ad in the local newspaper for $5,000.
- Purchased a building valued at $250,000 in exchange for $130,000 cash and a long-term note payable.
- Sold investments with a cost of $20,000 for $35,000.
REQUIRED:
Prepare journal entries for each transaction and explain how each affects the accounting equation.