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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

On June 1 of this year, J. Larkin, Optometrist, established the Larkin Eye Clinic. The clinic’s account names are presented below. Transactions completed during the month follow.

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  1. a. Larkin deposited $25,000 in a bank account in the name of the business.
  2. b. Paid the office rent for the month, $950, Ck. No. 1001.
  3. c. Bought supplies for cash, $357, Ck. No. 1002.
  4. d. Bought office equipment on account from NYC Office Equipment Store, $8,956.
  5. e. Bought a computer from Warden’s Office Outfitters, $1,636, paying $750 in cash and placing the balance on account, Ck. No. 1003.
  6. f. f. Sold professional services for cash, $3,482.
  7. g. Paid on account to Warden’s Office Outfitters, $886, Ck. No. 1004.
  8. h. Received and paid the bill for utilities, $382, Ck. No. 1005.
  9. i. Paid the salary of the assistant, $1,050, Ck. No. 1006.
  10. j. Sold professional services for cash, $3,295.
  11. k. Larkin withdrew cash for personal use, $1,250, Ck. No. 1007.

Required

  1. 1. Record the transactions and the balance after each transaction.
  2. 2. Total the left side of the accounting equation (left side of the equal sign), then total the right side of the accounting equation (right side of the equal sign). If the two totals are not equal, check the addition and subtraction. If you still cannot find the error, re-analyze each transaction.

1.

To determine

Record the figures in the given transactions for the respective accounts, and balance the figures after recording every transaction.

Explanation

Transaction: The economic events which bring about any changes in the financial items of a business and can be measured in the monetary units is referred to as a transaction.

Accounting equation: Accounting equation is a concept expressed in the form of equation, which creates a relation between resources or assets of a company and claims of resources to creditors and owners. Fundamental accounting equation is expressed as shown below:

Assets = Liabilities + Owners' EquityAssets = Liabilities+{(Owners' Capital

2.

To determine

Sum the balances of accounts to verify whether the balances on left side and on the right side in the accounting equation are equal.

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