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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

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

Assets following (d): $32,200

EFFECTS OF TRANSACTIONS (BALANCE SHEET ACCOUNTS) John Sullivan started a business. During the first month (February 20--), the following transactions occurred. Show the effect of each transaction on the accounting equation: Assets = Liabilities + Owner’s Equity. After each transaction, show the new totals.

(a) Invested cash in the business, $27,000.

(b) Bought office equipment on account, $7,500.

(c) Bought office equipment for cash, $1,600.

(d) Paid cash on account to supplier in transaction (b), $2,300.

To determine

Show the effect of each transaction on the accounting equation.

Explanation

Accounting equation: Accounting equation is an accounting tool expressed in the form of equation, by creating a relation between resources or assets of a business and claims on the resources by the creditors, and the owners

The effects of each transaction on the accounts of accounting equation are given bellow:

...
TransactionAssets=Liabilities+Owner’s Equity
(a)$27,000$27,000
Balance$27,000$27,000
(b)$7,500$7,500
Balance$34,500$7,500$27,000
(c)($1,600)

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