Question

$1,500 18. Apple Tree had the following balances when formed: Assets Liabilities Cash $2,400 Notes payable Equipment 1,300 Owner's Equity Johnny, capital Total assets $3,700 Total liabilities and owner's equity 2,200 53,700 During the first year of operations, the following transactions occurred: • Collected $12.000 cash in rental revenue Made a $2,000 investment in equity securities using $1,000 cash and a $1,000 note payable. Incurred and paid $2,000 in cash for utilities expense, $3,500 in rent expense, and $2,200 in wages expense. Johnny, Apple Tree's owner, withdrew $200 in cash from the business and contributed $1,500 in equipment. Show the cumulative effect on the accounting equation from the transactions for the year.

Answer 1

solution: = + cash Assets Equipment Investments Liabilities Notes payable Johnny capital owner's Equity Rental utilities Revenue Expenses Rent Expenses wages Exsperes $2400 $1,300 $1,500 $2,200 $12,000 $2,00D $ 11000 $12,600 $(1,000) $1,500) $(200) #2000) $(3,500 $(27200) $1200) $ 1,500 $1,500 $5,500 $2,800 $2,000 $2,500 $3,500 $12,000 $21000) $2,200 $13.500) Notes': > Accounting Equation is Assets : liabilities + owner's Esuiky Lermine which accounts the transaction affects and if the account is an asset, liability or owner's equity . account owner's Equity contains net income, which means revenues and esopenses transactions will be included. Next, determine if the amount will increase or decrease the account. The accounting equation should skill balance after showing the increase analor decrease.

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