Answer:
Spotlighter, Inc.
Indication of the accounts, amounts, and direction of the effects on the accounting equation:
1. Cash and Notes Payable, $5,440: Assets +$5,440 = Liabilities +$5,440
2. Cash and Common Stock, $6,130: Assets +$6,130 = Liabilities + Equity $6,130
3. Equipment, Cash, and Notes Payable, $2,500: Assets +$2,500 -$950 = Liabilities + $1,550 + Equity
4. Cash and Supplies: Assets -$1,050 - $1,050 = Liabilities + Equity
5. Supplies + Accounts Payable: Assets + $1,450 = Liabilities + $1,450 + Equity
Explanation:
Spotlighter's accounting equation of assets equal to liabilities plus equity will always be in balance with each business transaction that occurs. This is because each transaction involves two accounts on either side or both sides of the equation with a plus or minus action.
