Question

[intro] On April 1, Adventures Travel Agency Inc. began operations. The following transactions were completed during the month:

1.		Issued common shares for $5,000 cash.
2.		Obtained a bank loan for $20,000.
3.		Paid $11,000 cash to buy equipment.
4.		Paid $1,200 cash for April office rent.
5.		Paid $1,450 for supplies.
6.		Purchased $600 of newspaper advertising on account.
7.		Earned $18,000 for services performed: cash of $2,000 was received from customers, and the balance was billed to customers on account.
8.		Declared and paid $400 of dividends to shareholders.
9.		Paid the utility bill for the month, $2,000.
10.		Paid the amount due for newspaper advertising in transaction 6.
11.		Paid $100 of interest on the bank loan obtained in transaction 2.
12.		Paid employees’ salaries, $6,400.
13.		Received $12,000 cash from customers billed in transaction 7.
14.		Paid income tax, $1,500.

Prepare an equation analysis of the effects of the above transactions on the accounting equation. (If a transaction causes a decrease in Assets, Liabilities or Shareholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced. See Illustration 3.2 for example.)

	Assets								=		Liabilities			+		Shareholders’ Equity
																		Retained Earnings
Transaction		Cash	+	Accounts Receivable	+	Supplies	+	Equipment	=		Accounts Payable	+	Bank Loan Payable	+		Common Shares	+	Revenues	-	Expenses	-	Dividends Declared
1.	$		$		$		$			$		$			$		$		$		$
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Apr. 30 Bal.	$		$		$		$

Answer 1

Prepare an equation analysis of the effects of the above transactions on the accounting equation? Answer: + + + E + + + + + + + + + + + + + Assets = Liabilities Shareholders' equity No. Accounts Accounts Bank loan Retained Common Cash + receivable + Supplies + Equipment = payable + payable + earnings + shares 1 $ 5,000.00 + $ 5,000.00 2 $ 20,000.00 + $ 20,000.00 + 3 $ -11,000.00 + $ 11,000.00 = 4 $ -1,200.00 + + $ -1,200.00 + 5 $ -1,450.00 + $ 1,450.00 6 $ 600.00 + $ -600.00 + 7 $ 2,000.00 + $ 16,000.00 + + $ 18,000.00 + 8 $ -400.00 + $ -400.00 + 9 $ -2,000.00 + $ -2,000.00 + 10 $ -600.00 + = $-600.00 + 11 $ -100.00 + $ -100.00 + 12 $ -6,400.00 + $ -6,400.00 13 $ 12,000.00 + $ -12,000.00 14 $ -1,500.00 + $ -1,500.00 + Bal. $14,350.00 + $ 4,000.00 + $1,450.00 + $11,000.00 $ $ 20,000.00 $5,800.00 + $5,000.00 + + + + = + = + + + + + Please give thumbsup button if this solution helped. If you need any further explanation, kindly request in the comment section, glad to be helpful.