Presentation is loading. Please wait.

Presentation is loading. Please wait.

Sample Problem Chapter 2  Analyzing the effects of transactions on the accounting equation. On September 1, Mireya Cortez opened Self Images Tutoring.

Similar presentations


Presentation on theme: "Sample Problem Chapter 2  Analyzing the effects of transactions on the accounting equation. On September 1, Mireya Cortez opened Self Images Tutoring."— Presentation transcript:

1

2 Sample Problem Chapter 2

3  Analyzing the effects of transactions on the accounting equation. On September 1, Mireya Cortez opened Self Images Tutoring Service. Instructions Analyze the following transactions. Use the fundamental accounting equation form to record the changes in property, claims of creditors, and owner’s equity. (Use plus, minus, and equals signs.) Transactions 1.The owner invested $9,000 in cash to begin the business. 2.Purchased equipment for $4,000 in cash. 3.Purchased $1,500 of additional equipment on credit. 4.Paid $750 in cash to creditors. 5.The owner made an additional investment of $1,500 in cash. 6.Performed services for $1,080 in cash. 7.Performed services for $780 on account. 8.Paid $650 for rent expense. 9.Received $550 in cash from credit clients. 10.Paid $775 in cash for office supplies. 11.The owner withdrew $1,000 in cash for personal expenses.

4 Transaction #1 Assets = Liabilities + Owner’s Equity Cash+$9,000

5 Transaction #2 Assets = Liabilities + Owner’s Equity Cash$9,000 Equipment + 4,000 Cash - 4,000

6 Transaction #3 Assets = Liabilities + Owner’s Equity Cash 9,000 -4,000 5,000 Equipment 4,0009,000 EquipmentAccount Payable+1,500

7 Transaction #4 Assets = Liabilities + Owner’s Equity Cash 5,000 Equipment 4,000 +1,500Accounts Payable 5,5001,5009,000 CashAccounts Payable-750

8 Transaction #5 Assets = Liabilities + Owner’s Equity CashAccount Payable 5,0001,500 - 750- 750 4,250 750 Equipment 5,5009,000 CashInvestment+1,500

9 Transaction #6 Assets = Liabilities + Owner’s Equity Cash 4,250 9,000+1,500 5,75010,500 EquipmentAccounts Payable 5,500750 CashRevenue+1,080

10 Transaction #7 Assets = Liabilities + Owner’s Equity Cash 5,75010,500+1,080 6,83011,580 EquipmentAccounts Payable 5,500750 Account Receivable Revenue+780

11 Transaction #8 Assets = Liabilities + Owner’s Equity Cash 6,830 Account Receivable 11,580 780 + 780 EquipmentAccount Payable12,360 5,500750 CashExpense-650

12 Transaction #9 Assets = Liabilities + Owner’s Equity Cash 6,83012,360 - 650- 650 6,18011,710 Accounts Receivable 780 EquipmentAccounts Payable 5,500750 Cash +550 Account Receivable -550

13 Transaction #10 Assets = Liabilities + Owner’s Equity Cash 6,180 + 550 6,730 Accounts Receivable 780 -550 230 EquipmentAccounts Payable 5,50075011,710 Cash -775 Supplies +775

14 Transaction #11 Assets = Liabilities + Owner’s Equity Cash 6,730 - 775 5,955 Accounts Receivable 230 Equipment 5,500 SuppliesAccounts Payable 77575011,710 CashWithdrawal-1,000

15 Final Balances Assets = Liabilities + Owner’s Equity CashAccounts Payable 5,955 750 11,710-1,000 4,95510,710 Accounts Receivable 230 Equipment 5,500 Supplies 775

16 Analysis Transaction 3 increased the company’s debt by $1,500


Download ppt "Sample Problem Chapter 2  Analyzing the effects of transactions on the accounting equation. On September 1, Mireya Cortez opened Self Images Tutoring."

Similar presentations


Ads by Google