The following chart to show the effect of each transaction on the accounting equation. Transaction Assets = Liabilities + Shareholders’ Equity 1. Owners contributed $30,000 cash. 2. Purchased property for $20,000 cash. 3. Borrowed $9,000 cash from bank. 4. Provided services for $8,000 on account. 5. Paid $5,500 cash for expenses. 6. Paid $500 cash dividend to owners. Effect of each transaction on the accounting equation Particulars Assets= Liability+ Equity Owners contributed $30,000 cash. $30,000 0 $30,000 Purchased property for $20,000 cash. $20,000-$20,000 0 0 Borrowed $9,000 cash from bank. $9,000 $9,000 0 Provided services for $8,000 on account. $8,000 0 $8,000 Paid $5,500 cash for expenses. ($5,500) ($5,500) Paid $500 cash dividend to owners. ($500) 0 ($500 ) Considered the same transactions as above, but this time complete the following chart, using a separate sheet of paper. Accounting Equation Transaction Assets = Liabilities + Shareholders’ Equity Cash + Account receivable + Property = Notes payable + Common stock + Retained earnings 1. +30,000 +30,000 2. -20,000 +20,000 3. +9,000 +9,000 4. +8,000 +8,000 5. -5,500 -5,500 6. -500 -500 Total 13,000 + 8000 + 20,000 = 9,000 + 30,000 + 2,000 Total each asset, liability, and shareholders’ equity account in chart above, and prepare an income statement, a statement of shareholders’ equity, a balance sheet, and a statement of cash flows. Assume that the current year (i.e., 2020) is the company’s first year of operations, and the year end is December 31.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following chart to show the effect of each transaction on the accounting equation.

Transaction	Assets = Liabilities + Shareholders’ Equity

1. Owners contributed $30,000 cash.

2. Purchased property for $20,000 cash.

3. Borrowed $9,000 cash from bank.

4. Provided services for $8,000 on account.

5. Paid $5,500 cash for expenses.

6. Paid $500 cash dividend to owners.

Effect of each transaction on the accounting equation

Particulars	Assets=	Liability+	Equity
Owners contributed $30,000 cash.	$30,000	0	$30,000
Purchased property for $20,000 cash.	$20,000-$20,000	0	0
Borrowed $9,000 cash from bank.	$9,000	$9,000	0
Provided services for $8,000 on account.	$8,000	0	$8,000
Paid $5,500 cash for expenses.	($5,500)		($5,500)
Paid $500 cash dividend to owners.	($500)	0	($500 )

Considered the same transactions as above, but this time complete the following chart, using a separate sheet of paper.

Accounting Equation

Transaction	Assets	=	Liabilities	+	Shareholders’ Equity
	Cash	+	Account receivable	+	Property	=	Notes payable	+	Common stock	+	Retained earnings
1.	+30,000								+30,000
2.	-20,000				+20,000
3.	+9,000						+9,000
4.			+8,000								+8,000
5.	-5,500										-5,500
6.	-500										-500
Total	13,000	+	8000	+	20,000	=	9,000	+	30,000	+	2,000

Total each asset, liability, and shareholders’ equity account in chart above, and prepare an income statement, a statement of shareholders’ equity, a balance sheet, and a statement of cash flows. Assume that the current year (i.e., 2020) is the company’s first year of operations, and the year end is December 31.

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