Effects of transactions on the accounting equation
During 2008, The Limited entered into the transactions listed below.
a. On a separate sheet of paper, complete the following chart to show the effect of these transactions on the accounting equation and compute the net effect (dollars in millions).
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Transaction |
Assets = Liabilities + Shareholders” Equity |
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1.Repaid $15 of long term debt. |
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2.Paid cash dividends of $201. |
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3.Repurchased common stock for $379. |
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Net effect |
b. Compare and discuss how transactions 2 and 3 affected the basic accounting equation.