Amazon.com, Inc., headquartered in Seattle, WA, started its electronic commerce business in 1995 and expanded rapidly. The following transactions occurred during a recent year (dollars in millions):

1. Issued stock for $623 cash (example).
2. Purchased equipment costing $6,320, paying $4,893 in cash and charging the rest on account.
3. Paid $5,000 in principal and $300 in interest expense on long-term debt.
4. Earned $177,866 in sales revenue; collected $123,949 in cash with the customers owing the rest on their Amazon credit card account.
5. Incurred $25,249 in shipping expenses, all on credit.
6. Paid $118,241 cash on accounts owed to suppliers.
7. Incurred $10,069 in marketing expenses; paid cash.
8. Collected $38,200 in cash from customers paying on their Amazon credit card account.
9. Borrowed $16,231 in cash as long-term debt.
10. Used inventory costing $111,934 when sold to customers.
11. Paid $830 in income tax recorded as an expense in the prior year.

Required:

For each of the transactions, complete the tabulation, indicating the effect (positive value for increase, negative value for decrease, and leave blank if no effect) of each transaction.

Respuesta :

Answer:

1. Issued stock for $623 cash

Assets increase by $623

Stockholders' equity increase by $623

2. Purchased equipment costing $6,320, paying $4,893 in cash and charging the rest on account.

Assets increase by $6,320 (equipment)

Assets decrease by $4,893 (cash)

So assets net increase by $1,427

Liabilities increase by $1,427 (the amount that was paid on account)

3. Paid $5,000 in principal and $300 in interest expense on long-term debt.

Liabilities decrease by $5,300

4. Earned $177,866 in sales revenue; collected $123,949 in cash with the customers owing the rest on their Amazon credit card account.

Revenue increases by $177,886.

Assets increase by $177,886

5. Incurred $25,249 in shipping expenses, all on credit.

Expenses increase by $25,249

Liabilities increase by $25,249

6. Paid $118,241 cash on accounts owed to suppliers.

Assets decrease by $118,241

Liabilities decrease by $118,241

7. Incurred $10,069 in marketing expenses; paid cash.

Expenses increase by $10,069

Assets decrease by $10,069

8. Collected $38,200 in cash from customers paying on their Amazon credit card account.

Assets increase by $38,200

9. Borrowed $16,231 in cash as long-term debt.

Assets increase by $16,231

Liabilities increase by $16,231

10. Used inventory costing $111,934 when sold to customers.

Assets decrease by $111,934

11. Paid $830 in income tax recorded as an expense in the prior year.

Liabilities decrease by $830

The effect (positive value for increase, negative value for decrease, and leave blank if no effect) of each following transaction should be shown below:

1.

Assets increase by $623

Stockholders' equity increase by $623

2.

Assets increase by $6,320 (equipment)

Assets decrease by $4,893 (cash)

So assets net increase by $1,427

Liabilities increase by $1,427

3.

Liabilities decrease by $5,300

4.

Revenue increases by $177,886.

Assets increase by $177,886

5.

Expenses increase by $25,249

Liabilities increase by $25,249

6.

Assets decrease by $118,241

Liabilities decrease by $118,241

7.

Expenses increase by $10,069

Assets decrease by $10,069

8.

Assets increase by $38,200

9.

Assets increase by $16,231

Liabilities increase by $16,231

10.

Assets decrease by $111,934

11.

Liabilities decrease by $830

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