Accounting equation : In general the accounting equation states that assets equals liabilities plus equity i.e. Assets = Liabilities + Equity. In simple terms the total of assets must equal the total of liabilities and equity. Journal: In book keeping the procedure of recording financial transaction in date wise order is known as journal. It is referred commonly as the book of original entry. Ledger: Ledger is called as the book of final entry. It is a record of financial transactions in a summarized and classified form with debits and credits and shows the beginning and ending balances. Groro Co. bills a client $62,000 for services provided and agrees to accept the following three items in full payment (1) $10,000 cash, (2) equipment worth $80,000 and (3) to assume responsibility for a $28,000 note payable related to the equipment. For this transaction, (a) analyze the transaction using the accounting equation, (b) record the transaction in journal entry form, and (c) post the entry using T=-accounts to represent ledger accounts. Us the following (partial) chart of accounts − account numbers in parentheses: Cash (101); Supplies (124); Equipment (167); Accounts Payable (201); Note Payable (245); Owner Capital (301); and Revenue (404).

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Chapter 2, Problem 5E

To determine

Accounting equation:

In general the accounting equation states that assets equals liabilities plus equity i.e. Assets = Liabilities + Equity. In simple terms the total of assets must equal the total of liabilities and equity.

Journal:

In book keeping the procedure of recording financial transaction in date wise order is known as journal. It is referred commonly as the book of original entry.

Ledger:

Ledger is called as the book of final entry. It is a record of financial transactions in a summarized and classified form with debits and credits and shows the beginning and ending balances.

Groro Co. bills a client $62,000 for services provided and agrees to accept the following three items in full payment (1) $10,000 cash, (2) equipment worth $80,000 and (3) to assume responsibility for a $28,000 note payable related to the equipment. For this transaction, (a) analyze the transaction using the accounting equation, (b) record the transaction in journal entry form, and (c) post the entry using T=-accounts to represent ledger accounts. Us the following (partial) chart of accounts − account numbers in parentheses: Cash (101); Supplies (124); Equipment (167); Accounts Payable (201); Note Payable (245); Owner Capital (301); and Revenue (404).

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