Chapter 2, Problem 2.7E

(a)

To determine

Accounting Equation: The double entry book keeping system is based on an accounting equation which states that all the assets of the business are financed out of the funds either borrowed from outside or raised from the stakeholders. The accounting equation is:

${\text{Assets = Liabilities + Stockholder}}^{\text{,}}\text{sEquity}$

Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts.

To Indicate: (a) The effect of transactions on accounting equation.

(b)

To determine

To journalize: The transactions.