Concept explainers
Introduction: Each financial transaction or economic event will affect either assets, liabilities, or owners’ equity. Thus, the basis for recording these transactions in the accounting system depends on the
The Preparation of summary showing the effect of each transaction on the accounting equation.
Answer to Problem 3.5E
According to
Explanation of Solution
Assets = | Liabilities + | Stockholders’ equity | |||||||
Date/Balance | Cash | Receivables | Supplies | Land | Equipment | Accounts payable | Notes payable | Capital Stock | |
1 | $1,530 | $1,530 | |||||||
Bal. | $1,530 | $1,530 | |||||||
2 | $1,365 | $1,365 | |||||||
Bal. | $1,530 | $1,365 | $1,365 | $1,530 | |||||
3 | $750 | $750 | |||||||
Bal. | $750 | $1,530 | $1,365 | $1,365 | $2,280 | ||||
4 | -$4,240 | $4,240 | |||||||
Bal. | -$3,490 | $1,530 | $1,365 | $4,240 | $1,365 | $2,280 | |||
5 | $2,500 | $2,500 | |||||||
Bal. | -$990 | $1,530 | $1,365 | $4,240 | $1,365 | $2,500 | $2,280 | ||
6 | $890 | -$890 | |||||||
Bal. | -$100 | $640 | $1,365 | $4,240 | $1,365 | $2,500 | $2,280 | ||
7 | $50,000 | $50,000 | |||||||
Bal. | -$100 | $640 | $1,365 | $50,000 | $4,240 | $1,365 | $2,500 | $50,000 | $2,280 |
8 | -$4,000 | -$4,000 | |||||||
Bal. | -$4,100 | $640 | $1,365 | $50,000 | $4,240 | $1,365 | $2,500 | $50,000 | -$1,720 |
9 | -$500 | -$500 | |||||||
Bal. | ($4,600) | $640 | $1,365 | $50,000 | $4,240 | $865 | $2,500 | $50,000 | ($1,720) |
Total Assets = $51,645Total Liabilities and capital = $51,645
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Chapter 3 Solutions
Using Financial Accounting Information: The Alternative to Debits and Credits, Loose-Leaf Version
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