Q28E - Horngren'S Financial And Managerial Accounting

Question

Using the accounting equation to analyze business transactions The analysis of the first eight transactions of Advanced Accounting Service follows. Describe each transaction ASSETS EQUITY Common − Stock Contributed Capital Dividends + Retained Earnings − − Salaries Expense Service Revenue + + + + + + + + + + + + + + + + + + + + + + + + + + + 1 2 Bal. 3 Bal. 4 Bal. 5 Bal. 6 Bal. 7 Bal. 8 Bal. Accounts Receivable Cash +13,400 \(13,400 \)13,400 +410 \(13,810 \)13,810 \(13,810 \)13,810 +31,000 \(31,000 \)31,000 +190 \(31,190 –410 \)30,780 –8,000 \(22,780 +790 \)23,570 –1,500 \(22,070 +13,400 \)13,400 \(13,400 \)13,400 –8,000 \(5,400 \)5,400 \(5,400 +31,000 \)31,000 \(31,000 \)31,000 \(31,000 \)31,000 \(31,000 \)31,000 +3,800 \(3,800 \)3,800 –190 \(3,610 \)3,610 \(3,610 \)3,610 \(3,610 +3,800 \)3,800 \(3,800 \)3,800 \(3,800 \)3,800 +790 \(4,590 \)4,590 −1,500 $1,500 LIABILITIES Accounts Payable

Step-by-Step Solution

Answer

(1) Stockholder contribution

(2) Earning of Service Revenue on Account

(3) Purchase of equipment on account

(4) Collection on Account (Accounts Receivable)

(5) Purchase of equipment for cash

(6) Payment on Account (Accounts Payable)

(7) Earning of Service Revenue for Cash

(8) Payment of Salaries Expenses with Cash

Step 1: Explanation on Transaction Analysis

Trasaction analysis is the process in wffwct of the transaction on various accounts is analyzed.

Step 2: Explanation on Accounting Equation

As per the accounting equation, affect of financial transaction of the business should be equal in both sides of the equation.