Question

1. Prepare a tabular analysis of the transactions below. 1. Stockholders invested $150,000 in the business 2. Provided services totaling $8,500. Received $4000 and the remainder is on account 3. Purchased $1,500 of supplies. Paid 50% and the remainder is on account 4. Purchased office equipment costing $20,000; Paid $5,000 and signed a 1-year note for the remainder 5. Incurred utilities, $2,500 6. Received cash for services provided, $3,500 7. Paid cash for supplies, $450 8. Received cash for services provided, $3,000 9. Paid cash for repairs, $1,800 10. Received cash, $10,000, from XYZ Bank - money borrowed on a note payable 11. Paid an amount owed to a creditor, $500 12. Received $1,000 from customers who were previously billed 13. Incurred $1,200 in advertising costs on account 14. Paid cash for rent, $5,000 15. Provided services on account, $6,000 II. Use your tabular analysis to answer the questions below: a. How much are total assets? b. How much are total liabilities? c. How much is total equity? d. Is the accounting equation in balance?

Answer 1

C. Basic Accounting Equation : Assets = Liabilities +Net worth Assets Liabilities + Networth NO. Cash A/R Supplies Equipments Accounts payable Notes payable Common stock Retained Earinings +150000 +150000 2 +4000 +4500 +8500(Rev.) 31-750 +1500 +750 4-5000 +20000 +15000 5-2500 -2500(utl.exp) 6 +3500 +3500(Rev.) 71-450 +450 8 +3000 +3000(Rev.) 9 -1800 -1800(Repairs exp) 10/+10000 +10000 a. Total Assets 186950 b. Total Liabilities 26450 Total Equity 160500 Accounting Equation :Assets = Liabilities + Net worth 186950 = 26450+160500 We can see here that accounting equation, in balance. -500 11 -500 12+1000 -1000 13 +1200 14 -5000 -1200(Adve.exp) -5000(Rent exp) +6000(Rev.) 150000 10500 15 +6000 155500 9500 1950 200001 250 26200 Balance 186950 186950