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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

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 (CapitalDrawing + RevenuesExpenses). 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--.

To determine

Prepare an income statement for the month of October.

Explanation

Income statement: Income statement is the financial statement of a company which shows all the revenues earned and expenses incurred by the company over a period of time.

Prepare an income statement:

DS
Income Statement
For the month of October
ParticularsAmount
Revenues [ Refer Figure (1)]$2,700
Expenses
Office rent [ Refer Figure (1)]($650...

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