Evaluate the effect of each transaction by constructing a balance sheet showing
ID: 2508241 • Letter: E
Question
Evaluate the effect of each transaction by constructing a balance sheet showing an assets side and liabilities and owner’s equity.
Transactions for September:
1. Purchased $1,240 of paint from Painting Paradise on credit.
2. The owner invested $10,000 of his own money in the business.
3. Harding Gordon District High School purchased $575 worth of supplies on credit.
4. Paid $800 of the account payable to Painting Paradise.
5. Purchased a computer (equipment) for $1,130 and paid cash.
6. Cash sales for the month amounted to $6,375.
7. Paid $5,000 cash for this month’s rent.
8. Sold $1,380 of art supplies to Main College on credit.
9. Harding Gordon District High School paid $1,500 of their A/R.
10. Bank service charges totaled to $425 which was paid out of the business bank account. 1
11. Borrowed $20,000 from the bank and placed it directly in the bank account.
Explanation / Answer
Solution :
Transaction
Assets
=
Liability
+
Owners’ Equity
1.
Inventory
+ $ 1,240
=
Accounts Payable
+ $ 1,240
+
NA
NA
2.
Cash
+ $ 10,000
=
NA
NA
+
Capital invested
+ $ 10,000
3.
Supplies
Accounts Receivable
- $ 575
+ $ 575
=
NA
NA
+
NA
NA
4.
Cash
-$ 800
=
Accounts Payable
-$ 800
+
NA
NA
5.
Computer (Equipment)
Cash
+$ 1,130
-$ 1,130
=
NA
NA
+
NA
NA
6.
Cash
+$ 6,375
=
NA
NA
+
Sales Revenue
+$ 6,375
7.
Cash
-$ 5,000
=
NA
NA
+
Rent Expense
- $ 5,000
8.
Art supplies
Accounts Receivable
-$ 1,380
+$ 1,380
=
NA
NA
+
NA
NA
9.
Cash
Accounts Receivable
+$ 1,500
-$ 1,500
=
NA
NA
+
NA
NA
10.
Bank
-$ 425
=
NA
NA
+
Bank charges expense
-$ 425
11.
Bank
+$ 20,000
=
Bank loan or borrowings
+$ 20,000
+
NA
NA
Total
$ 31,390
=
$ 20,440
+
$ 10,950
Transaction
Assets
=
Liability
+
Owners’ Equity
1.
Inventory
+ $ 1,240
=
Accounts Payable
+ $ 1,240
+
NA
NA
2.
Cash
+ $ 10,000
=
NA
NA
+
Capital invested
+ $ 10,000
3.
Supplies
Accounts Receivable
- $ 575
+ $ 575
=
NA
NA
+
NA
NA
4.
Cash
-$ 800
=
Accounts Payable
-$ 800
+
NA
NA
5.
Computer (Equipment)
Cash
+$ 1,130
-$ 1,130
=
NA
NA
+
NA
NA
6.
Cash
+$ 6,375
=
NA
NA
+
Sales Revenue
+$ 6,375
7.
Cash
-$ 5,000
=
NA
NA
+
Rent Expense
- $ 5,000
8.
Art supplies
Accounts Receivable
-$ 1,380
+$ 1,380
=
NA
NA
+
NA
NA
9.
Cash
Accounts Receivable
+$ 1,500
-$ 1,500
=
NA
NA
+
NA
NA
10.
Bank
-$ 425
=
NA
NA
+
Bank charges expense
-$ 425
11.
Bank
+$ 20,000
=
Bank loan or borrowings
+$ 20,000
+
NA
NA
Total
$ 31,390
=
$ 20,440
+
$ 10,950
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.