Question

Analyze the events​ chronologically, one transaction at a​ time, beginning with the transaction on the 5th. For each transaction that follows​ the transaction on the​ 5th, calculate the balance in each account after analyzing its effect on the accounting equation. After calculating the ending balance of each account on the 30​th,
calculate total assets and total liabilities and equity.​(Complete only the necessary answer boxes for your transaction lines.​ [Do not enter any zeros for your transaction​ lines.] Carry down all balances to the​ "Bal." line, including zero balance​accounts, entering a​ "0" for any zero balances. Enter a decrease in an account with a minus sign or parentheses. Abbreviations​used: A/P​ = Accounts​ Payable; A/R​ = Accounts​ Receivable; Com.​= Common; Contr.​ = Contributed; Div.​ = Dividends; Exp.​ = Expense; Furn.​ = Furniture; Liab​ = Liabilities; Rev.​ = Revenue; Sup.​ = Supplies; Util.​ = Utilities.)

Answer 1

QUESTION COMPLETION:

TRANSACTIONS:

April 5 Shaff deposited $40,000 in a new business bank account titled Apr. Abraham Shaff, CPA. The business issued common stock to Shaff.

April 6 Paid $200 cash for letterhead stationery for new office

April 7 Purchased office furniture for the office on account, $8,000.

April 10 Consulted with tax client and received $2,900 for services rendered. 11 Paid utilities, $280.

April 12 Finished tax hearings on behalf of a client and submitted a bill for accounting services, $8,000.

April 18 Paid office rent, $1,700.

April 25 Received amount due from client that was billed on April 12

April 27 Paid full amount of accounts payable created on April 7

April 30 Cash dividends of $2,500 were paid to stockholders.

Answer:

See attached.

Explanation:

The question requires business events to be analyzed chronologically with each event's impact on the accounting equation.

The accounting equation states that Assets equal Liabilities plus Equity (Assets = Liabilities + Equity).  The implication of this equation is that given each business transaction, Assets will always be equal to Liabilities and Equity.  Two accounts or more are usually affected by each transaction.  It may be two assets accounts or one asset and liabilities, etc.  Expenses and Income impact the Retained Earnings, which is part of the Equity.

Assets are the resources owned by the business, while liabilities are financial obligations to third parties that contribute to the owned resources.  Equity is the funds contributed by the stockholders, including the earnings retained from business.  Equity, therefore, represents the ownership interest in the assets after liabilities have been deducted.

Download xlsx