Answer:
Based on the analysis, the basic accounting equations holds as follows:
Total Assets = Total Liabilities + Total Shareholders' Equity => 2,078,000 = 1,912,000 + 166,000
Explanation:
Note: See the attached excel file for the horizontal analysis.
For event C: Advance payment for Equipment rentals = $29,000 * 5 months = $145,000
All the items under the shareholders’ fund are income statement items that will affect the retained earnings.
The additional note below the horizontal analysis in the excel file shows that accounting equations holds. That is;
Total Assets = Total Liabilities + Total Shareholders' Equity => 2,078,000 = 1,912,000 + 166,000
