
Concept explainers
The accounting equation represents the asset side on the left and liabilities and equity on the right side. The basic principle is that all the assets when debited, are increased, and are decreased when credited.
For liability accounts, it is increased when credited and decreased when debited.
Equity accounts are increased by net profit earned, further capital contribution and decreased by the net loss suffered, dividend distributions and withdrawals.
To Create:
A table summarizing the transactions from a through j in accounting equation format and drawing balances for each account after every transaction occurred.

Answer to Problem 13E
After affecting all the transactions, the balances at the end of the month are as follows:
Cash: $46,000
Equipment: $31,000
Accounts Payable: Nil
Common Stock: $75,000
Dividends: $1,000
Revenues: $10,500
Expenses: $4,500
Explanation of Solution
Assets | = | Liabilities | + | Equity | |||||||||||||
Cash | + | Accounts Receivable | + | Equipment | = | Accounts Payable | + | Common Stock | - | Dividends | + | Revenues | - | Expenses | |||
a | $60,000 | $15,000 | $75,000 | ||||||||||||||
Balance | $60,000 | $15,000 | $75,000 | ||||||||||||||
b | $(1,500) | $1,500 | |||||||||||||||
Balance | $58,500 | $15,000 | $75,000 | $1,500 | |||||||||||||
c | $10,000 | $10,000 | |||||||||||||||
Balance | $58,500 | $25,000 | $10,000 | $75,000 | $1,500 | ||||||||||||
d | $2,500 | $2,500 | |||||||||||||||
Balance | $61,000 | $25,000 | $10,000 | $75,000 | $2,500 | $1,500 | |||||||||||
e | $8,000 | $8,000 | |||||||||||||||
Balance | $61,000 | $8,000 | $25,000 | $10,000 | $75,000 | $10,500 | $1,500 | ||||||||||
f | $(6,000) | $6,000 | |||||||||||||||
Balance | $55,000 | $8,000 | $31,000 | $10,000 | $75,000 | $10,500 | $1,500 | ||||||||||
g | $(3,000) | $3,000 | |||||||||||||||
Balance | $52,000 | $8,000 | $31,000 | $10,000 | $75,000 | $10,500 | $4,500 | ||||||||||
h | $5,000 | $(5,000) | |||||||||||||||
Balance | $57,000 | $3,000 | $31,000 | $10,000 | $75,000 | $10,500 | $4,500 | ||||||||||
i | $(10,000) | $(10,000) | |||||||||||||||
Balance | $47,000 | $3,000 | $31,000 | $0 | $75,000 | $10,500 | $4,500 | ||||||||||
j | $(1,000) | $1,000 | |||||||||||||||
Balance | $46,000 | $3,000 | $31,000 | $0 | $75,000 | $1,000 | $10,500 | $4,500 |
A negative figure in the cash account column represents a decrease in cash, otherwise, all figures represent positive amounts, i.e., increase in cash resources.
At the end of the month, the left side or the asset side has a total of $80,000 (Cash: $46,000; Accounts Receivable: $3,000; Equipment: $31,000)
The total of the right side or the liabilities and equity side have a total of $80,000 (Liabilities: Nil; Equity: $75,000 - $1,000 + $10,500 - $4,500 = $80,000)
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Chapter 1 Solutions
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