Question

A (Static) Using T accounts to record all business transactions. LO 3-1, 3-2, 3-4

Answer 1

Answer:

It is very difficult to record T accounts since there is not a lot of room here and things get complicated very easily. So I used an excel spreadsheet to post the accounts on an accounting equation format.

Assets increase when they are debited and they decrease when they are credited. The opposite happens to liabilities and equity, they increase when they are credited and decrease when they are debited. Service revenue is credited, while all expenses are debited.

The reason why the drawings account has a negative balance is that even though it is an equity account, it has a debit balance since it decreases capital.

In order for the equation to balance, you have to close the accounts, but that was not a requirement of the question.

What liabilities does the business have after all transactions have been recorded?

the only liability account is accounts payable with a credit balance of $24,700

   

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