Chapter 1, Problem 16EA

Analyze business transactions using the accounting equation. (LO 4). John Weiss recently started a lawn care service named “The Grass Is Always Greener, Inc.” The following transactions occurred during the company’s first month of business. Enter each of the following transactions into the accounting equation and identify an increase or decrease to assets, liabilities, shareholder’s equity, revenues, or expenses.

1. 1. John contributed $16,500 of personal savings in exchange for common stock to start the business.
2. 2. The company purchased $7,500 of inventory (plants and shrubs) from a gardening wholesaler in Kansas.
3. 3. The company purchased three riding lawn mowers at a cost of $5,000 each.
4. 4. The company paid rent expense of $500 the first month.
5. 5. The company earned service revenue of $9,000 and sold the entire $7,500 of inventory it had purchased to customers for $13,250 cash.

All the transactions were for cash. Use the following format: