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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 B PROBLEMS

THE ACCOUNTING EQUATION Dr. Patricia Parsons is a dentist. As of January 31, Parsons owned the following property that related to her professional practice:

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REQUIRED

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

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2. During February, the assets increase by $4,565, and the liabilities increase by $3,910. Compute the resulting accounting equation.

3. During March, the assets decrease by $2,190, and the liabilities increase by $1,650. 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($22,860)=Liabilities ($4,605)+Owners’ equity ($18,255(1))

2.

To determine

Compute the resulting accounting equation if assets increase by $4,565, and the liabilities increase by $3,910.

3.

To determine

Compute the resulting accounting equation if assets decrease by $2,190, and the liabilities increase by $1,650.

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