Analyzing the effects of transactions on the accounting equation.
Andrew Wells is a painting contractor who specializes in painting commercial buildings. At the beginning of June, his firm’s financial records showed the following assets, liabilities, and owner’s equity.
Cash | $31,760 | Accounts Payable | $8,200 |
Accounts Receivable | 14,400 | Andrew Wells, Capital | 101,700 |
Office Furniture | 33,800 | Revenue | 42,780 |
Auto | 54,100 | Expenses | 18,620 |
INSTRUCTIONS
Set up an accounting equation using the balances given above. Record the effects of the following transactions in the equation. (Use plus, minus, and equals signs.) Record new balances after each transaction has been entered. Prove the equality of the two sides of the final equation on a separate sheet of paper.
TRANSACTIONS
1. Performed services for $5,350 on credit.
2. Paid $1,200 in cash for new office chairs.
3. Received $5,600 in cash from credit clients.
4. Paid $640 in cash for telephone service.
5. Sent a check for $1,500 in partial payment of the amount due creditors.
6. Paid salaries of $7,800 in cash.
7. Sent a check for $700 to pay electric bill.
8. Performed services for $9,700 in cash.
9. Paid $1,840 in cash for auto repairs.
10. Performed services for $8,900 on account.
Analyze: What is the amount of total assets after all transactions have been recorded?
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