Accounting Exercises, Week One: The Accounting Equation

Using the chart below, record the impact on the accounting equation for
each transaction:
1. Owner invests $1,000 in cash
Asset

Liability

Cash
1,000

Owners Equity
Owners Capital
$1,000

2. Owner invests a $30,000 automobile

Asset

Liability

Owners Equity
Owners Capital
1,000
30,000
31,000

Cash + automobile
1,000 + 30,000
31,000

3. Owner takes out $5,000 in cash

Asset

Liability

Cash + automobile
1,000 + 30,000
-5,000
-4,000 + 30,000
26,000

Owners Equity

Owners Capital
31,000
-5,000
26,000

4. Owner takes out $3,000 of supplies

Asset

Liability

Owners Equity
Owners Capital
26,000
-3,000
29,000

Cash + Supplies + Automobile

-4,000 + 3,000 + 30,000
29,000

5. Sold $2,000 on account to be paid in 20days

Asset

Liability

Owners Equity

Owners Capital
29,000
2,000 sales rev.
31,000

Cash + Acc. Rec + Supp + Auto

-4000 + 2,000 + 3,000 + 30,000
31,000

6. Customer pays bill it owed the company $1,000

Asset

Liability

Cash + Acc. Rec + Supp + Auto

-4,000 +2,000 +3,000 +30,000
1,000
-3,000
32,000

Owners Equity

Owners Capital
31,000
1,000
32,000

7. Sold $5,000 of product to be paid in 30 days

Asset

Liability

Cash + Acc. Rec + Supp + Auto

-3,000 +2,000 +3,000 +30,000
5,000
7,000
37,000

Owners Equity

Owners Capital
32,000
5,000 sales rev
37,000

8. Sold 10,000 of product to be paid in 10 days

Asset
Cash +Acc. Rec + Supp = Auto
-3,000 + 7,000 + 3,000 + 30,000
10,000
17,000
47,000

9. Paid the Electric Bill $2,500

Liability

Owners Equity

Owners Capital
37,000
10,000 sales rev
47,000

Asset

Liability

Cash + acc. Rec + Supp + Auto

-3,000 + 17,000 + 3,000 + 30,000
-2,500
-5,500
44,500

10.

Owners Equity
Owners Capital
47,000
-2,500 electric expense
44,500

Record Rent Exp. $4,000 to be paid in 30days

Assets

Liabilities

Owners Equity

Cash +Acc. Rec + Supp + Auto

-5,500 + 17,000 + 3,000 + 30,000
-4,000
-9,500
40,500

Accounts Payable
-4,000 rent expense
-4,000

Owners Capital
44,500

11.

40,500

Sold $30,000 received cash

Asset

Liability

Owners Equity

Cash +Acc Rec + Supp + Auto

-9,500 + 17,000 + 3,000 + 30,000
30,000
20,500
70,500

Accounts Payable

Owners Capital
44,500
30,000
74,500
70,500

-4,000