Question

I would like you to notice the Accounitng Equation refers to assets, liabilities in plural not in the singular mode. Typically most business have a large number of assets as well as a large number of liabilities. Owners Equity is ordinarily represent by amounts invested by the owners and the cumulative retained profits (generally referred to as Retained Earnings) if the organization has had profitable operations or losses if the business had not had profitable operations. Profits result in positive retained earnings which increase the owners equity and if the company had losses the retained earnings would represent a reduction of owners equity. Using this expanded version of the Accounting equation A = Liabilities + Common Stock + R/E show how the following events would be reflected in the equation: Use Excel. 1. Owners invest cash $10,000 2. Business borrowed $ 5,000 cash from a friend 3. Business acquired Furniture $2000 (cash) 4. Office supplies acquired on credit, $1,500 5. The Company provided a service for which they were paid $1200 cash 6. The cost of services provided in (5) above were $850 consisting of wages $500 and $350 of non cash expenses of wear and tear on equipment. 7. Owners invest $5000 consisting of $ 2000 cash and $3000 equipment 8. The business borrows $ 6,000 from a local bank. 9. The business bills for services rendered to a customer for $ 1,200 10. The customer billed in (9) above is allowed $ 20 discount for paying the amount billed early. 11. The business purchased inventory for $3,000 on account or on credit. 12. Inventory costing $ 1200 from (11) above was sold for $ 2500 cash. This is how I want you to answer these questions using Question Number 7 for illustration. Increase (in) Decrease (dc) No Change (nc) 7. Assets: Cash (in) 2000 + Equipment (in) 3,000 = Liabilities n/c + CS 5000 (in) + R/E n/c

2:33 26% I would like you to notice the Accounitng Equation refers to assets, liabilities in plural not in the singular mode. Typically most business have a large number of assets as well as a large number of liabilities Owners Equity is ordinarily represent by amounts invested by the owners and the cumulative retained profits (generally referred to as Retained Earnings) if the organization has had profitable operations or losses if the business had not had profitable operations. Profits result in positive retained earnings which increase the owners equity and if the company had losses the retained earnings would represent a reduction of owners equity. Using this expanded version of the Accounting equation A Liabilities + Common Stock + R/E show how the following events would be reflected in the equation: Use Excel 1. Owners invest cash $10,000 2. Business borrowed $ 5,000 cash from a friend 3. Business acquired Furniture $2000 (cash) 4. Office supplies acquired on credit, $1,500 5. The Company provided a service for which they were paid $1200 cash 6. The cost of services provided in (5) above were $850 consisting of wages $500 and $350 of non cash expenses of wear and tear on equipment 7. Owners invest $5000 consisting of $ 2000 cash and $3000 equipment 8. The business borrows $ 6,000 from a local bank. 9. The business bills for services rendered to a customer for $ 1,200 10. The customer billed in (9) above is allowed $ 20 discount for paying the amount billed early 11. The business purchased inventory for

Answer 1

1. Asset: Cash (in)10000 = liabilities(n/c) + CS(in) 10000+ R/E(n/c)

2. Asset: Cash(in) 5000= liabilities: loan from friend(in) 5000+ CS(n/c) + R/E (n/c)

3. Assets: furniture(in) 2000 cash(dc) 2000= liabilities(n/c)+ CS(n/c) + R/E (n/c)

4. Assets: office supplies(in) 1500 = liabilities: trade payables (in) 1500+ CS(n/c) + R/E (n/c)

5. Assets: cash (in) 1200 = liabilities(n/c) + CS(n/c) + R/E (in) 1200

6. Assets: cash(dc) 500 equipment (dc) 350= liabilities(n/c) + CS(n/c) + R/E (dc) 850

7. Assets: cash(in) 2000 equipment(in)3000 = liabilities(n/c) + CS(in) 5000+ R/E(n/c)

8. Assets: cash(in) 6000= liabilities: bank loan(in) 6000+ CS(n/c) + R/E (n/c)

9. Assets: accounts receivable(in) 1200= liabilities(n/c) + CS(n/c) + R/E (in) 1200

10. Assets: accounts receivable(dc) 20 = liabilities (n/c) + CS (n/c) + R/E (dc) 20

11. Assets: inventory (in) 3000 cash (dc) 3000=  liabilities(n/c)+ CS(n/c) + R/E (n/c)

12. Assets: inventory(dc) 1200 cash(in) 2500= liabilities(n/c) + CS(n/c) + R/E(in) 2500