1- On a separate piece of paper, complete the following chart to show the effect of each transaction on the accounting equation.
1- On a separate piece of paper, complete the following chart to show the effect of each transaction on the
| Transaction | Assets = Liabilities + Shareholders’ Equity |
|---|---|
|
1. Owners contributed $30,000 cash. 2. Purchased property for $20,000 cash. 3. Borrowed $9,000 cash from bank. 4. Provided services for $8,000 on account. 5. Paid $5,500 cash for expenses. 6. Paid $500 cash dividend to owners. |
2- Consider the same transactions as in question 1, but this time complete the following chart, using a separate sheet of paper.
| Assets | = | Liabilities | + | Shareholders’ Equity | ||||
| Trans. | Cash | Property | = | Notes Payable | + | Common Stock | ||
|
1. 2. 3. 4. 5. 6. |
3- Total each asset, liability, and shareholders’ equity account in question 2, and prepare an income statement, a statement of shareholders’ equity, a balance sheet, and a statement of cash flows. Assume that the current year (i.e., 2020) is the company’s first year of operations, and the year end is December 31.
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