Problem 2-9a effect of transactions on accounting equation ebook

Problem 2-9A
Effect of Transactions on Accounting Equation

eBook Learning Objective 3Learning Objective 4

Jay Pembroke started a business. During the first month (April 20–), the following transactions occurred.

1. Invested cash in business, $18,000.
2. Bought office supplies for $4,600: $2,000 in cash and $2,600 on account.
3. Paid one-year insurance premium, $1,200.
4. Earned revenues totaling $3,300: $1,300 in cash and $2,000 on account.
5. Paid cash on account to the company that supplied the office supplies in transaction (b), $2,300.
6. Paid office rent for the month, $750.
7. Withdrew cash for personal use, $100.

Required:

Show the effect of each transaction on the individual accounts of the expanded accounting equation: Assets = Liabilities + Owner’s Equity (Capital – Drawing + Revenues – Expenses). After transaction (g), report the totals for each element. If an amount box does not require an entry, leave it blank.

Demonstrate that the accounting equation has remained in balance.