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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. BALANCE SHEET Based on Problem 2-9A, prepare a balance sheet for Jay Pembroke as of April 30, 20--.

BuyFind

College Accounting, Chapters 1-27

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

College Accounting, Chapters 1-27

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

Solutions

Chapter
Section
Chapter 2, Problem 12SPA
Textbook Problem

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 (CapitalDrawing + RevenuesExpenses). After transaction (g), report the totals for each element. Demonstrate that the accounting equation has remained in balance.

BALANCE SHEET Based on Problem 2-9A, prepare a balance sheet for Jay Pembroke as of April 30, 20--.

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Chapter 2 Solutions

College Accounting, Chapters 1-27
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