EFFECT OF TRANSACTIONS ON ACCOUNTING EQUATION Jay Pembroke started a business. During the first month (April 20--), the following transactions occurred.(a) Invested cash in business, $18,000.(b) Bought office supplies for $4,600: $2,000 in cash and $2,600 on account.(c) Paid one-year insurance premium, $1,200.(d) Earned revenues totaling $3,300: $1,300 in cash and $2,000 on account.(e) Paid cash on account to the company that supplied the office supplies in transaction(b), $2,300.(f) Paid office rent for the month, $750.(g) Withdrew cash for personal use, $100. REQUIRED Show the effect of each transaction on the individual accounts of the expanded accounting equation: Assets = Liabilities + Owner’s Equity (Capital − Drawing + Revenues −Expenses). After transaction (g), report the totals for each element. Demonstrate that the accounting equation has remained in balance. STATEMENT OF OWNER’S EQUITY Based on Problem 2-9A, prepare a statement ofowner’s equity for Jay Pembroke for the month of April 20--.

College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter2: Analyzing Transactions: The Accounting Equation
Section: Chapter Questions
Problem 4SEB: EFFECTS OF TRANSACTIONS (BALANCE SHEET ACCOUNTS) Jon Wallace started a business. During the first...
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EFFECT OF TRANSACTIONS ON ACCOUNTING EQUATION Jay Pembroke started a business. During the first month (April 20--), the following transactions occurred.
(a) Invested cash in business, $18,000.
(b) Bought office supplies for $4,600: $2,000 in cash and $2,600 on account.
(c) Paid one-year insurance premium, $1,200.
(d) Earned revenues totaling $3,300: $1,300 in cash and $2,000 on account.
(e) Paid cash on account to the company that supplied the office supplies in transaction
(b), $2,300.
(f) Paid office rent for the month, $750.
(g) Withdrew cash for personal use, $100.

REQUIRED

Show the effect of each transaction on the individual accounts of the expanded accounting equation: Assets = Liabilities + Owner’s Equity (Capital − Drawing + Revenues −Expenses). After transaction (g), report the totals for each element. Demonstrate that the accounting equation has remained in balance. STATEMENT OF OWNER’S EQUITY Based on Problem 2-9A, prepare a statement ofowner’s equity for Jay Pembroke for the month of April 20--.

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