Chapter 1, Problem 10E

Analysis using the accounting equation

Zen began a new consulting firm on January 5. Following is a financial summary, including balances, for each of the company’s first five transactions (using the accounting equation form).

Identify the explanation from a through j below that best describes each transaction 1 through 5 above and enter it in the blank space in front of each numbered transaction.

1. a. The company purchased office furniture for $8,000 cash.
2. b. The company received $40,000 cash from a bank loan.
3. c. The owner invested $1,000 cash in the business in exchange for its common stock.
4. d. The owner invested $40,000 cash in the business in exchange for its common stock.
5. e. The company purchased office supplies for $3,000 by paying $2,000 cash and putting $1,000 on credit.
6. f. The company billed a customer $6,000 for services provided.
7. g. The company purchased office furniture worth $8,000 on credit.
8. h. The company provided services for $1,000 cash.
9. i. The company sold office supplies for $3,000 and received $2,000 cash and $1,000 on credit
10. j. j. The company provided services for $6,000 cash.