Evaluate the effect of each transaction by constructing a balance sheet showing
ID: 2509224 • 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 paints 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.
11- Borrowed $20,000 from the bank and placed it directly in the bank account.
Explanation / Answer
Answer
Transactions
ASSETS
Liabilities
Owner's Equity
Cash
Inventory
Supplies
Accounts receivables
Equipment
Accounts Payable
Loan
1
$ 1,240.00
$ 1,240.00
2
$ 10,000.00
$ 10,000.00
3
$ 575.00
$ 575.00
4
$ (800.00)
$ (800.00)
5
$ (1,130.00)
$ 1,130.00
6
$ 6,375.00
$ 6,375.00
7
$ (5,000.00)
$ (5,000.00)
8
$ 1,380.00
$ 1,380.00
9
$ (1,500.00)
$ 1,500.00
10
$ (425.00)
$ (425.00)
11
$ 20,000.00
$ 20,000.00
TOTAL
$ 27,520.00
$ 1,240.00
$ 575.00
$ 2,880.00
$ 1,130.00
$ 1,015.00
$ 20,000.00
$ 12,330.00
ASSETS
Current Assets:
Cash
$ 27,520.00
Inventory
$ 1,240.00
Supplies
$ 575.00
Accounts receivables
$ 2,880.00
Total Current Assets
$ 32,215.00
Plant, Property & Equipment
$ 1,130.00
TOTAL ASSETS
$ 33,345.00
LIABILITIES
Accounts payable
$ 1,015.00
Loans
$ 20,000.00
Total LIABILITIES
$ 21,015.00
Owners' Equity total
$ 12,330.00
Total LIABILITIES & OWNERs EQUITY
$ 33,345.00
Transactions
ASSETS
Liabilities
Owner's Equity
Cash
Inventory
Supplies
Accounts receivables
Equipment
Accounts Payable
Loan
1
$ 1,240.00
$ 1,240.00
2
$ 10,000.00
$ 10,000.00
3
$ 575.00
$ 575.00
4
$ (800.00)
$ (800.00)
5
$ (1,130.00)
$ 1,130.00
6
$ 6,375.00
$ 6,375.00
7
$ (5,000.00)
$ (5,000.00)
8
$ 1,380.00
$ 1,380.00
9
$ (1,500.00)
$ 1,500.00
10
$ (425.00)
$ (425.00)
11
$ 20,000.00
$ 20,000.00
TOTAL
$ 27,520.00
$ 1,240.00
$ 575.00
$ 2,880.00
$ 1,130.00
$ 1,015.00
$ 20,000.00
$ 12,330.00
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