# Problem 2-9a effect of transactions on accounting equation ebook

Problem 2-9A
Effect of Transactions on Accounting Equation

Jay Pembroke started a business. During the first month (April 20–), the following transactions occurred.

1. Invested cash in business, \$18,000.
2. Bought office supplies for \$4,600: \$2,000 in cash and \$2,600 on account.
3. Paid one-year insurance premium, \$1,200.
4. Earned revenues totaling \$3,300: \$1,300 in cash and \$2,000 on account.
5. Paid cash on account to the company that supplied the office supplies in transaction (b), \$2,300.
6. Paid office rent for the month, \$750.
7. Withdrew cash for personal use, \$100.

Required:

Show the effect of each transaction on the individual accounts of the expanded accounting equation: Assets = Liabilities + Owner’s Equity (Capital – Drawing + Revenues – Expenses). After transaction (g), report the totals for each element. If an amount box does not require an entry, leave it blank.

 Assets = Liabilities + Owner’s Equity Cash + Accounts Receivable + Office Supplies + Prepaid Insurance = Accounts Payable + J. Pembroke, Capital – J. Pembroke, Drawing + Revenues – Expenses Description a. e. g. [removed][removed] [removed][removed] [removed][removed] [removed][removed] [removed][removed] [removed][removed] [removed][removed] [removed][removed] [removed][removed] Bal. [removed][removed] [removed][removed] [removed][removed] [removed][removed] [removed][removed] [removed][removed] [removed][removed] [removed][removed] [removed][removed]

Demonstrate that the accounting equation has remained in balance.

 Cash \$[removed][removed] Accounts receivable [removed][removed] Office supplies [removed][removed] Prepaid insurance [removed][removed] Total Assets \$[removed][removed]
 Accounts payable \$[removed][removed] Jay Pembroke, capital [removed][removed] Jay Pembroke, drawing [removed][removed] Service fees [removed][removed] Rent expense [removed][removed] Total Liabilities and Owner’s Equity \$[removed][removed]