Question

Exercise 1-15 (Algo) Identifying effects of transactions using the accounting equation LO P1

Ming Chen started a business and had the following transactions in June.

1. Owner invested $68,000 cash in the company along with $29,000 of equipment in exchange for its common stock.
2. The company paid $2,100 cash for rent of office space for the month.
3. The company purchased $10,000 of additional equipment on credit (payment due within 30 days).
4. The company completed work for a client and immediately collected $1,600 cash.
5. The company completed work for a client and sent a bill for $9,000 to be received within 30 days.
6. The company purchased additional equipment for $6,100 cash.
7. The company paid an assistant $3,000 cash as wages for the month.
8. The company collected $5,300 cash as a partial payment for the amount owed by the client in transaction e.
9. The company paid $10,000 cash to settle the liability created in transaction c.
10. The company paid $1,100 cash in dividends to the owner (sole shareholder).

Required:
Complete the table using additions and subtractions to show the dollar effects of the transactions on individual items of the accounting equation. Show new balances after each transaction. (Enter decreases to account balances with a minus sign.)

Assets Liabilities Equity Cash + Accounts Recelvable Equipment Accounts Payable Common Stock Dividends + Revenues Expenses a. + + b. + + Bal 0 + + 0 0 = 0 + 0 + 0 0 + c. Bal d. 0 + 0 + 0 E 0 0 0 + 0 0 + + + Bal 0 + 0 + 0 0 0 0 + 0 0 e. + = + 4 Bal 0 0 + 0 0 + 0 0 + 0 0 + f. Bal. 0 + 0 0 = 0 + - 0 + 10 0 0 + g. Bal 0 + 0 + 0 0 0 + 10 0 0 h. + + + 0 Bal + 0 + 0 0 + + 0 0 0 0 + + i. + + 0 0 + ol + 0 0 + 0 0 Bal. 0 + + + + . Bal. + 0 0 0 0 $ $ $ 0 $ $ 0 + 0 + $ + 0 $ $

Answer 1

	Assets					=	Liabilities	+	Equity
	Cash	+	Accounts Receivable	+	Equipment	=	Accounts Payable	+	Common Stock	-	Dividends	+	Revenues	-	Expenses
a.	$68,000	+		+	$ 29,000	=		+	$97,000	-		+		-
b.	- 2,100	+		+		=		+		-		+		-	2,100
bal	65,900	+	0	+	29,000	=	0	+	97,000	-	0	+	0	-	2,100
c		+		+	10,000	=	10,000	+		-		+		-
bal	65,900	+	0	+	39,000	=	10,000	+	97,000	-	0	+	0	-	2,100
d	1,600	+		+		=		+		-		+	1,600	-
bal	67,500	+	0	+	39,000	=	10,000	+	97,000	-	0	+	1,600	-	2,100
e		+	9,000	+		=		+		-		+	9,000	-
bal	67,500	+	9,000	+	39,000	=	10,000	+	97,000	-	0	+	10,600	-	2,100
f	- 6,100	+		+	6,100	=		+		-		+		-
bal	61,400	+	9,000	+	45,100	=	10,000	+	97,000	-	0	+	10,600	-	2,100
g	- 3,000	+		+		=		+		-		+		-	3,000
bal	58,400	+	9,000	+	45,100	=	10,000	+	97,000	-	0	+	10,600	-	5,100
h	5,300	+	- 5,300	+		=		+		-		+		-
bal	63,700	+	3,700	+	45,100	=	10,000	+	97,000	-	0	+	10,600	-	5,100
i	- 10,000	+		+		=	- 10,000	+		-		+		-
bal	53,700	+	3,700	+	45,100	=	0	+	97,000	-	0	+	10,600	-	5,100
j	- 1,100	+		+		=		+		-	1,100	+		-
bal	$52,600	+	3,700	+	45,100	=	0	+	97,000	-	1,100	+	10,600	-	5,100