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Transaction Analysis: Exercise 1:Mark Jones, an engineering graduate, experienced the following business events in the month ofSeptember:1. He started an engineering consulting business with a cash investment of $10,000 andoffice equipment worth $5,000.2. Purchased office supplies (stationery, pens, paper etc.). $800 cash was paid.3. Bought a scanner/printer for $500 on account from IBM.4. Paid $400 salary to staff.5. Received electricity bill for $300.6. Earned consulting fees of $20,000 for services completed. Of this, $12,000 was receivedin cash and $8,000 was owed by clients.7. Paid $300 to IBM as repayment.8. Withdrew $100 for own use.9. Received $1,000 from one of the clients who owed him money.10. As at September 30, there was $600 of office supplies on hand.Required:Analyze these transactions according to the accounting equation using transaction analysis.Transaction Analysis: Exercise 2:On April 20XX, J. Doff decided to open a painting business called J. Doff Painting Services. Thefollowing transactions took place during the first month of April.1. Owner contributed $20,000 cash to commence business.2. Billed customers for services performed, $9,000.3. Purchased painting supplies on credit for $400.4. Received $4,000 from customers from (2) above.5. Purchased a van for $8,000, paying $2,000 in cash and obtaining a loan for theremainder.6. Paid $100 of amount due for supplies from (3) above.7. J. Doff withdrew $1,000.8. Used $100 worth of painting supplies.9. Paid expenses in cash (advertising $300, telephone $400, electricity $300).10. Paid $2,000 off loan for van in (5) above.REQUIRED:Record the transactions in an accounting equation table (transaction analysis)

Question

Transaction Analysis: Exercise 1:Mark Jones, an engineering graduate, experienced the following business events in the month ofSeptember:1. He started an engineering consulting business with a cash investment of 10,000andofficeequipmentworth10,000 andoffice equipment worth 5,000.2. Purchased office supplies (stationery, pens, paper etc.). 800cashwaspaid.3.Boughtascanner/printerfor800 cash was paid.3. Bought a scanner/printer for 500 on account from IBM.4. Paid 400salarytostaff.5.Receivedelectricitybillfor400 salary to staff.5. Received electricity bill for 300.6. Earned consulting fees of 20,000forservicescompleted.Ofthis,20,000 for services completed. Of this, 12,000 was receivedin cash and 8,000wasowedbyclients.7.Paid8,000 was owed by clients.7. Paid 300 to IBM as repayment.8. Withdrew 100forownuse.9.Received100 for own use.9. Received 1,000 from one of the clients who owed him money.10. As at September 30, there was 600ofofficesuppliesonhand.Required:Analyzethesetransactionsaccordingtotheaccountingequationusingtransactionanalysis.TransactionAnalysis:Exercise2:OnApril20XX,J.DoffdecidedtoopenapaintingbusinesscalledJ.DoffPaintingServices.ThefollowingtransactionstookplaceduringthefirstmonthofApril.1.Ownercontributed600 of office supplies on hand.Required:Analyze these transactions according to the accounting equation using transaction analysis.Transaction Analysis: Exercise 2:On April 20XX, J. Doff decided to open a painting business called J. Doff Painting Services. Thefollowing transactions took place during the first month of April.1. Owner contributed 20,000 cash to commence business.2. Billed customers for services performed, 9,000.3.Purchasedpaintingsuppliesoncreditfor9,000.3. Purchased painting supplies on credit for 400.4. Received 4,000fromcustomersfrom(2)above.5.Purchasedavanfor4,000 from customers from (2) above.5. Purchased a van for 8,000, paying 2,000incashandobtainingaloanfortheremainder.6.Paid2,000 in cash and obtaining a loan for theremainder.6. Paid 100 of amount due for supplies from (3) above.7. J. Doff withdrew 1,000.8.Used1,000.8. Used 100 worth of painting supplies.9. Paid expenses in cash (advertising 300,telephone300, telephone 400, electricity 300).10.Paid300).10. Paid 2,000 off loan for van in (5) above.REQUIRED:Record the transactions in an accounting equation table (transaction analysis)

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Solution

Exercise 1:

The accounting equation is Assets = Liabilities + Owner's Equity.

  1. Cash investment of 10,000andofficeequipmentworth10,000 and office equipment worth 5,000. Assets (Cash + Equipment): 15,000=Liabilities:15,000 = Liabilities: 0 + Owner's Equity: $15,000

  2. Purchased office supplies for 800cash.Assets(Cash−800 cash. Assets (Cash - 800 + Supplies): 14,200=Liabilities:14,200 = Liabilities: 0 + Owner's Equity: $14,200

  3. Bought a scanner/printer for 500onaccountfromIBM.Assets(Equipment+500 on account from IBM. Assets (Equipment + 500): 14,700=Liabilities(AccountsPayable+14,700 = Liabilities (Accounts Payable + 500): 500+Owner′sEquity:500 + Owner's Equity: 14,200

  4. Paid 400salarytostaff.Assets(Cash−400 salary to staff. Assets (Cash - 400): 14,300=Liabilities:14,300 = Liabilities: 500 + Owner's Equity: $13,800

  5. Received electricity bill for 300.Assets:300. Assets: 14,300 = Liabilities (Accounts Payable + 300):300): 800 + Owner's Equity: $13,500

  6. Earned consulting fees of 20,000.Ofthis,20,000. Of this, 12,000 was received in cash and 8,000wasowedbyclients.Assets(Cash+8,000 was owed by clients. Assets (Cash + 12,000 + Accounts Receivable + 8,000):8,000): 34,300 = Liabilities: 800+Owner′sEquity:800 + Owner's Equity: 33,500

  7. Paid 300toIBMasrepayment.Assets(Cash−300 to IBM as repayment. Assets (Cash - 300): 34,000=Liabilities(AccountsPayable−34,000 = Liabilities (Accounts Payable - 300): 500+Owner′sEquity:500 + Owner's Equity: 33,500

  8. Withdrew 100forownuse.Assets(Cash−100 for own use. Assets (Cash - 100): 33,900=Liabilities:33,900 = Liabilities: 500 + Owner's Equity (Withdrawal - 100):100): 33,400

  9. Received 1,000fromoneoftheclientswhoowedhimmoney.Assets(Cash+1,000 from one of the clients who owed him money. Assets (Cash + 1,000 - Accounts Receivable - 1,000):1,000): 33,900 = Liabilities: 500+Owner′sEquity:500 + Owner's Equity: 33,400

  10. As at September 30, there was 600ofofficesuppliesonhand.Assets(Supplies−600 of office supplies on hand. Assets (Supplies - 600): 33,300=Liabilities:33,300 = Liabilities: 500 + Owner's Equity: $32,800

Exercise 2:

  1. Owner contributed 20,000cashtocommencebusiness.Assets(Cash):20,000 cash to commence business. Assets (Cash): 20,000 = Liabilities: 0+Owner′sEquity:0 + Owner's Equity: 20,000

  2. Billed customers for services performed, 9,000.Assets(AccountsReceivable):9,000. Assets (Accounts Receivable): 29,000 = Liabilities: 0+Owner′sEquity:0 + Owner's Equity: 29,000

  3. Purchased painting supplies on credit for 400.Assets(Supplies):400. Assets (Supplies): 29,400 = Liabilities (Accounts Payable): 400+Owner′sEquity:400 + Owner's Equity: 29,000

  4. Received 4,000fromcustomersfrom(2)above.Assets(Cash+4,000 from customers from (2) above. Assets (Cash + 4,000 - Accounts Receivable - 4,000):4,000): 29,400 = Liabilities: 400+Owner′sEquity:400 + Owner's Equity: 29,000

  5. Purchased a van for 8,000,paying8,000, paying 2,000 in cash and obtaining a loan for the remainder. Assets (Van + 8,000−Cash−8,000 - Cash - 2,000): 35,400=Liabilities(Loan+35,400 = Liabilities (Loan + 6,000): 6,400+Owner′sEquity:6,400 + Owner's Equity: 29,000

  6. Paid 100ofamountdueforsuppliesfrom(3)above.Assets(Cash−100 of amount due for supplies from (3) above. Assets (Cash - 100): 35,300=Liabilities(AccountsPayable−35,300 = Liabilities (Accounts Payable - 100): 6,300+Owner′sEquity:6,300 + Owner's Equity: 29,000

  7. J. Doff withdrew 1,000.Assets(Cash−1,000. Assets (Cash - 1,000): 34,300=Liabilities:34,300 = Liabilities: 6,300 + Owner's Equity (Withdrawal - 1,000):1,000): 28,000

  8. Used 100worthofpaintingsupplies.Assets(Supplies−100 worth of painting supplies. Assets (Supplies - 100): 34,200=Liabilities:34,200 = Liabilities: 6,300 + Owner's Equity: $27,900

  9. Paid expenses in cash (advertising 300,telephone300, telephone 400, electricity 300).Assets(Cash−300). Assets (Cash - 1,000): 33,200=Liabilities:33,200 = Liabilities: 6,300 + Owner's Equity: $26,900

  10. Paid 2,000offloanforvanin(5)above.Assets(Cash−2,000 off loan for van in (5) above. Assets (Cash - 2,000): 31,200=Liabilities(Loan−31,200 = Liabilities (Loan - 2,000): 4,300+Owner′sEquity:4,300 + Owner's Equity: 26,900

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