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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

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

SERIES A PROBLEMS

THE ACCOUNTING EQUATION Dr. John Salvaggi is a chiropractor. As of December 31, he owned the following property that related to his professional practice.

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REQUIRED

1. From the preceding information, compute the accounting elements and enter them in the accounting equation shown as follows.

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2. During January, the assets increase by $8,540, and the liabilities increase by $3,360. Compute the resulting accounting equation.

3. During February, the assets decrease by $3,460, and the liabilities increase by $2,000. Compute the resulting accounting equation.

1.

To determine

Compute the accounting elements and enter them in 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.

Figure (1)

Therefore, from the above accounting equation, it is ascertained that,

Assets($26,960)=Liabilities ($7,550)+Owners’ equity ($19,410(1))

2.

To determine

Compute the resulting accounting equation if assets increase by $8,540, and the liabilities increase by $3,360.

3.

To determine

Compute the resulting accounting equation if assets decrease by $3,460, and the liabilities increase by $2,000.

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