Chapter 3, Problem 3.14E

(a)

To determine

Accounting equation:

Accounting equation represents the relationship between assets, liabilities and shareholders’ equity.  It is the foundation of double entry system and it helps to analyze the business transaction.  Accounting equation displays the total assets are equal to the total liabilities and shareholders’ equities.   Thus, the accounting equation is,

$\boxed{\text{Assets}\text{=}\text{Liabilities}\text{+}\text{Stockholders'}\text{Equity}}$

Journal:

Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

• Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
• Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

T-account:

T-account refers to an individual account, where the increases or decreases in the value of specific asset, liability, stockholder’s equity, revenue, and expenditure items are recorded.

This account is referred to as the T-account, because the alignment of the components of the account resembles the capital letter ‘T’.’ An account consists of the three main components which are as follows:

1. (a) The title of the account
2. (b) The left or debit side
3. (c) The right or credit side

To show: The effect of each transaction on the accounting equation and explanation for changes to stockholders’ equity.

(b)

To determine

To journalize: the transaction given in the books of T Corporation

(c)

To determine

To post:  the transaction to T-accounts of T Corporation as on September, 30.