Determining the Effect of Transactions on the Accounting
Equation
INSTRUCTIONS
Use the accounts of WordService to analyze these
business transactions. The beginning balance for each account is shown following the account name.
Assets
Cash in Bank, $24,000
Accounts Receivable, $700
Computer Equipment, $4,000
Office Equipment, $5,000
Liabilities
Accounts Payable
$3,000
+
Owner's Equity Jan Swift, Capital
$30,700
On the form provided in your working papers, identify the accounts affected by each transaction and the amount of the increase or decrease for each account. Make sure the accounting equation is in balance after each transaction.
1. Paid $50 for advertising in the local newspaper.
2. Received $1,000 as payment for preparing a report.
3. Wrote a $600 check for the month's rent.
4. Jan Swift withdrew $800 for her personal use.
5. Received $200 on account from the person who had purchased the old off furniture