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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

EFFECTS OF TRANSACTIONS (BALANCE SHEET ACCOUNTS) Jon Wallace started a business. During the first month (March 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 account totals.

(a) Invested cash in the business, $30,000.

(b) Bought office equipment on account, $4,500.

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

(d) Paid cash on account to supplier in transaction (b), $2,000.

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)$30,000$30,000
Balance$30,000$30,000
(b)$4,500$4,500
Balance$34,500$4,500$30,000
(c)$1,600

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