# EFFECT OF TRANSACTIONS ON ACCOUNTING EQUATION David Segal started a business. During the first month (October 20--), the following transactions occurred. (a) Invested cash in the business, \$15,000. (b) Bought office supplies for \$3,800: \$1,800 in cash and \$2,000 on account. (c) Paid one-year insurance premium, \$1,000. (d) Earned revenues amounting to \$2,700: \$1,700 in cash and \$1,000 on account. (e) Paid cash on account to the company that supplied the office supplies in transaction (b), \$1,800. (f) Paid office rent for the month, \$650. (g) Withdrew cash for personal use, \$150. 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. INCOME STATEMENT Based on Problem 2-9B, prepare an income statement for David Segal for the month of October 20--.

### College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
Publisher: Cengage Learning,
ISBN: 9781337794756

### College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
Publisher: Cengage Learning,
ISBN: 9781337794756

#### Solutions

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Chapter 2, Problem 10SPB
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