Using Financial Accounting Information
Using Financial Accounting Information
10th Edition
ISBN: 9781337276337
Author: Porter, Gary A.
Publisher: Cengage Learning,
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Chapter 3, Problem 3.3.1AAP
To determine

Introduction: Each financial transaction or economic event will affect either assets, liabilities, or owners’ equity. Thus, the basis for recording the transaction in the accounting system depends on the accounting equation. The accounting equation is:

  Assets=Liabilities+Stockholder'sEquity

The Preparation of summary table showing the effect of each transaction on the accounting equation.

Expert Solution & Answer
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Answer to Problem 3.3.1AAP

According to Accounting equation

  Assets=Liabilities+Stockholder'sEquity

  TotalAssets=($22,400+$1,500+$4,000+350)=$28,250

  LiabilitiesandStockholders'sequity=($350+$7,500+$20,000+$400)=$28,250

Explanation of Solution

The table is prepared as follows:

    Assets = Liabilities + Stockholders’ equity
    Date/Balance Cash Receivables Supplies Computer Equipment Accounts payable Notes payable Capital Stock Retained earnings
    3/2 $20,000 $20,000
    Bal. $20,000 $20,000
    3/7 $7,500 $7,500
    Bal. $27,500 $7,500 $20,000
    3/12 $350 $350
    Bal. $27,500 $350 $350 $7,500 $20,000
    3/19 $2,000 $2,000
    Bal. $27,500 $2,000 $350 $350 $7,500 $20,000 $2,000
    3/20 -$650 -$650
    Bal. $26,850 $2,000 $350 $350 $7,500 $20,000 $1,350
    3/22 $500 -$500
    Bal. $27,350 $1,500 $350 $350 $7,500 $20,000 $1,350
    3/26 $1,400 $1,400
    Bal. $28,750 $1,500 $350 $350 $7,500 $20,000 $2,750
    3/29 -$4,000 $4,000
    Bal. $24,750 $1,500 $350 $4,000 $350 $7,500 $20,000 $2,750
    3/30 -1,650 -$1,650
    Bal. $23,100 $1,500 $350 $4,000 $350 $7,500 $20,000 $1,100
    3/31 $700 -$700
    -$700 -$700
    Bal. $22,400 $1,500 $350 $4,000 $350 $7,500 $20,000 $400

Total Assets = $28,250Total Liability and Capital = $28,250

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Chapter 3 Solutions

Using Financial Accounting Information

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