solution

Classifying events as asset source, use, or exchange

The following unrelated events are typical of those experienced by business entities.

 1. Acquire cash by issuing common stock.

2. Purchase land with cash.

3. Purchase equipment with cash.

4. Pay monthly rent on an offi ce building.

5. Hire a new offi ce manager.

6. Borrow cash from a bank.

7. Pay a cash dividend to stockholders.

8. Pay cash for operating expenses.

9. Pay an offi ce manager’s salary with cash.

10. Receive cash for services that have been performed.

11. Pay cash for utilities expense.

12. Acquire land by accepting a liability (financing the purchase).

13. Pay cash to purchase a new office building.

14. Discuss plans for a new office building with an architect.

15. Repay part of a bank loan.

Required

Identify each of the events as an asset source, use, or exchange transaction. If an event would not be recorded under generally accepted accounting principles, identify it as not applicable (NA). Also indicate for each event whether total assets would increase, decrease, or remain unchanged. Organize your answer according to the following table. The first event is shown in the table as an example.

 
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