1. 3-1

2. 3-2 THE ACCOUNTING INFORMATION SYSTEM Financial Accounting, Seventh Edition 3

3. 3-3 Event (1). On October 1, cash of $10,000 is invested in Sierra Corporation by investors in exchange for $10,000 of common stock. Accounting Transactions 1.+10,000+10,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

4. 3-4 Event (2). On October 1, Sierra borrowed $5,000 from Castle Bank by signing a 3-month, 12%, $5,000 note payable. Accounting Transactions 1.+10,000+10,000 2.+5,000+5,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

5. 3-5 Event (3). On October 2, Sierra purchased equipment by paying $5,000 cash to Superior Equipment Sales Co. Accounting Transactions 3.-5,000+5,000 1.+10,000+10,000 2.+5,000+5,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

6. 3-6 Event (4). On October 2, Sierra received a $1,200 cash advance from R. Knox, a client. Accounting Transactions 4.+1,200+1,200 3.-5,000+5,000 1.+10,000+10,000 2.+5,000+5,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

7. 3-7 Event (5). On October 3, Sierra received $10,000 in cash from Copa Company for guide services performed. Accounting Transactions 4.+1,200+1,200 5.+10,000+10,000 3.-5,000+5,000 1.+10,000+10,000 2.+5,000+5,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

8. 3-8 Event (6). On October 3, Sierra Corporation paid its office rent for the month of October in cash, $900. Accounting Transactions 4.+1,200+1,200 5.+10,000+10,000 6.-900-900 3.-5,000+5,000 1.+10,000+10,000 2.+5,000+5,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

9. 3-9 Event (7). On October 4, Sierra paid $600 for a one-year insurance policy that will expire next year on September 30. Accounting Transactions 4.+1,200+1,200 5.+10,000+10,000 6.-900-900 7.-600+600 3.-5,000+5,000 1.+10,000+10,000 2.+5,000+5,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

10. 3-10 Event (8). On October 5, Sierra purchased an estimated three months of supplies on account from Aero Supply for $2,500. Accounting Transactions 4.+1,200+1,200 5.+10,000+10,000 6.-900-900 7.-600+600 8.+2,500+2,500 3.-5,000+5,000 1.+10,000+10,000 2.+5,000+5,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

11. 3-11 Event (9). On October 9, Sierra hired four new employees to begin work on October 15. Accounting Transactions 4.+1,200+1,200 5.+10,000+10,000 6.-900-900 7.-600+600 8.+2,500+2,500 3.-5,000+5,000 1.+10,000+10,000 2.+5,000+5,000 LO 1 Analyze the effect of business transactions on the basic accounting equation. An accounting transaction has not occurred.

12. 3-12 Event (10). On October 20, Sierra paid a $500 dividend. Accounting Transactions 4.+1,200+1,200 5.+10,000+10,000 6.-900-900 7.-600+600 8.+2,500+2,500 10.-500-500 3.-5,000+5,000 1.+10,000+10,000 2.+5,000+5,000 LO 1 Analyze the effect of business transactions on the basic accounting equation.

13. 3-13 Event (11). Employees have worked two weeks, earning $4,000 in salaries, which were paid on October 26. Accounting Transactions 4.+1,200+1,200 5.+10,000+10,000 6.-900-900 7.-600+600 8.+2,500+2,500 10.-500-500 11.-4,000-4,000 3.-5,000+5,000 1.+10,000+10,000 2.+5,000+5,000

14. 3-14 The Trial Balance Illustration 3-34 Equal LO 8

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