The following chart to show the effect of each transaction on the accounting equation. 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. Effect of each transaction on the accounting equation Particulars Assets= Liability+ Equity Owners contributed $30,000 cash. $30,000 0 $30,000 Purchased property for $20,000 cash. $20,000-$20,000 0 0 Borrowed $9,000 cash from bank. $9,000 $9,000 0 Provided services for $8,000 on account. $8,000 0 $8,000 Paid $5,500 cash for expenses. ($5,500) ($5,500) Paid $500 cash dividend to owners. ($500) 0 ($500 ) Considered the same transactions as above, but this time complete the following chart, using a separate sheet of paper. Accounting Equation Transaction Assets = Liabilities + Shareholders’ Equity Cash + Account receivable + Property = Notes payable + Common stock + Retained earnings 1. +30,000 +30,000 2. -20,000 +20,000 3. +9,000 +9,000 4. +8,000 +8,000 5. -5,500 -5,500 6. -500 -500 Total 13,000 + 8000 + 20,000 = 9,000 + 30,000 + 2,000 Total each asset, liability, and shareholders’ equity account in chart above, 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.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter2: Basic Accounting Systems: Cash Basis

Section: Chapter Questions

Problem 2.10E: Effects of transactions on Accounting equation On Time Delivery Service had the following selected...

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The following chart to show the effect of each transaction on the accounting equation.

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.

Effect of each transaction on the accounting equation

Particulars	Assets=	Liability+	Equity
Owners contributed $30,000 cash.	$30,000	0	$30,000
Purchased property for $20,000 cash.	$20,000-$20,000	0	0
Borrowed $9,000 cash from bank.	$9,000	$9,000	0
Provided services for $8,000 on account.	$8,000	0	$8,000
Paid $5,500 cash for expenses.	($5,500)		($5,500)
Paid $500 cash dividend to owners.	($500)	0	($500 )

Considered the same transactions as above, but this time complete the following chart, using a separate sheet of paper.

Accounting Equation

Transaction	Assets	=	Liabilities	+	Shareholders’ Equity
	Cash	+	Account receivable	+	Property	=	Notes payable	+	Common stock	+	Retained earnings
1.	+30,000								+30,000
2.	-20,000				+20,000
3.	+9,000						+9,000
4.			+8,000								+8,000
5.	-5,500										-5,500
6.	-500										-500
Total	13,000	+	8000	+	20,000	=	9,000	+	30,000	+	2,000

Total each asset, liability, and shareholders’ equity account in chart above, 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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