Chapter 3, Problem 3.2E

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,

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

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