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

Problem 2-9A
Effect of Transactions on Accounting Equation

eBook Learning Objective 3Learning Objective 4

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]

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