47PGB
Question
Meg McIntyre opened a public relations firm called Pop Chart on August 1, 2018. The following amounts summarize her business on August 31, 2018During September 2018, the business completed the following transactions: a. Received contribution of \(14,000 cash from Meg McIntyre in exchange for common stock. b. Performed service for a client and received cash of \)1,600. c. Paid off the beginning balance of accounts payable. d. Purchased office supplies from OfficeMax on account, \(1,200. e. Collected cash from a customer on account, \)2,300. f. Cash dividends of \(1,500 were paid to stockholders. g. Consulted for a new band and billed the client for services rendered, \)4,000. h. Recorded the following business expenses for the month: Paid office rent: \(900. Paid advertising: \)450. Analyze the effects of the transactions on the accounting equation of Pop Chart using the format presented above.:
Step-by-Step Solution
VerifiedEffect of the transaction on the accounting equation is shown as follows:
| Assets | = | Liabilities | + | Equity | ||||||||||||||
Contributed Capital | + | Retained Earnings | |||||||||||||||||
Cash | + | Accounts Receivable | + | Office Supplies | + | Land | Accounts Payable | Common Stock | - | Dividends | + | Service Revenue | - | Rent Expense | - | Advertising Expense | |||
Bal. | $2,600 | + | $2,500 | + | $0 | + | $16,000 | = | $5,000 | + | $13,600 |
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| + | $2,500 |
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a | +14,000 |
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| +14,000 |
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Bal. | $16,600 | + | $2,500 | + | $0 | + | $16,000 | = | $5,000 | + | $27,600 |
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| + | $2,500 |
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b | +1,600 |
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| +,1600 |
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Bal. | $18,200 | + | $2,500 | + | $0 | + | $16,000 | = | $5,000 | + | $27,600 |
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| + | $4,100 |
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c | -5000 |
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| -5000 |
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Bal. | $13,200 | + | $2,500 | + | $0 | + | $16,000 | = | $0 | + | $27,600 |
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| + | $4,100 |
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d |
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| +1,200 |
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| +1,200 |
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Bal. | $13,200 | + | $2,500 | + | $1,200 | + | $16,000 | = | $1,200 | + | $27,600 |
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| + | $4,100 |
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e | +2,300 |
| -2,300 |
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Bal. | $15,500 | + | $200 | + | $1,200 | + | $16,000 | = | $1,200 | + | $27,600 |
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| + | $4,100 |
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f | -1,500 |
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| -1,500 |
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Bal. | $14,000 | + | $200 | + | $1,200 | + | $16,000 | = | $1,200 | + | $27,600 | - | $1,500 | + | $4,100 |
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g |
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| +4,000 |
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| +4,000 |
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Bal. | $14,000 | + | $4,200 | + | $1,200 | + | $16,000 | = | $1,200 | + | $27,600 | - | $1,500 | + | $8,100 |
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h | -1350 |
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| -900 |
| -450 |
Bal. | $12,650 | + | $4,200 | + | $1,200 | + | $16,000 | = | $1,200 | + | $27,600 | - | $1,500 | + | $8,100 | - | $900 | - | $450 |
| $34,050 |
| $34,050 |
Transaction analysis analyzes the transaction and indicates the accounts involved in the transaction.
As per the accounting equation, the total of assets of a company should be equal to the total of liabilities and stockholders’ equity of the company. As per the above accounting equation, the left side of the equation is $34,050, which is also equal to the right side of equation.