Explanation Transaction analysis: Transaction analysis is an economic event that causes impact on the value of the assets, liabilities or stockholder’s equity (increase or decrease) in an accounting equation . (a) Transaction occurred: Attorney MT received payment of $7,500 from customers on account. Effect on accounting equation: Cash (asset) is increased by $7,500. Accounts receivable (asset) is decreased by $7,500. Note : Cash account is increased and accounts receivable is decreased when a company receives cash from its customers. (b) Transaction occurred: Attorney MT purchased supplies for cash of $400. Effect on accounting equation: Cash (asset) is decreased by $400. Supplies account (asset) is increased by $400. Note: Supplies accounts are increased and cash accounts is decreased when a Company purchases supplies for cash. (c) Transaction occurred: Attorney MT rendered services and billed clients, $8,000. Effect on accounting equation: Accounts receivable (asset) is increased by $8,000. Retained earnings (stockholders’ equity) are increased by $8,000. Note: Retained earnings account and accounts receivable is increased when a Company renders services and bills for its clients. (d) Transaction occurred: Attorney MT paid $800, which were due on account...

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ISBN: 9781618530400

Author: FERRIS

Publisher: Cambridge

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Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business…

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Chapter 2, Problem 1BP

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Describe the effect of each of the transactions on the accounting equation.

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Chapter 2, Problem 17AP

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Finn's Furniture has accounts receivable of $5,280, inventory of $2,100, sales of $152,000, and cost of goods sold of $75,600. How many days does it take the firm to sell its inventory and collect the payment on the sale assuming all sales are on credit?

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Financial Accounting for Undergraduates

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