Evaluate each of the following transactions in terms of their effect on assets, liabilities, and equity. 1. Borrow $55,000 from a bank
2. Buy $14,000 worth of manufacturing supplies on credit
3. Pay $7,000 owed to a supplier
4. Receive payment of $12,000 owed by a customer
5. Issue $75,000 in stock
6. Purchase equipment for $44,000 in cash
7. Receive payment of $13,000 owed by a customer
What is the net change in Total Assets?

1. Borrow $55,000 from a bank

Assets increase by $55,000Liabilities increase by $55,000No effect on equity  

2. Buy $14,000 worth of manufacturing supplies on credit

Assets increase by $14,000Liabilities increase by $14,000No effect on equity

3. Pay $7,000 owed to a supplier

Assets decrease by $7,000Liabilities decrease by $7,000No effect on equity

4. Receive payment of $12,000 owed by a customer

No effect on assetNo effect on liabilityNo effect on equity

5. Issue $75,000 in stock

Assets increase by $75,000No effect on liability Equity increases by $75,000

6. Purchase equipment for $44,000 in cash

No effect on assetNo effect on liabilityNo effect on equity  

7. Receive payment of $13,000 owed by a customer

No effect on assetNo effect on liabilityNo effect on equity

Net change in assets = 55,000 + 14,000 - 7,000 + 75,000

= $137,000

Assets increased by $137,000

200% of direct labor cost

Explanation:

The computation of the company overhead application rate is shown below;

But before that overhead cost would be determined

GIP = Direct material + Direct labor + Overhead

$4,400 = $2,000 + $800 + Overhead

So,

Overhead = $4,400 - $2,000 - $800

= $1,600

Now the overhead application rate is

= overhead ÷ direct labor cost

= $1,600 ÷ $800 × 100

= 200%