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Lecture 3 - Analysing and Recording Transactions

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36 views

Lecture 3 - Analysing and Recording Transactions

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htd102305
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LECTURE 3 – ANALYSING AND RECORDING TRANSACTIONS

Exercise 1: TRANSACTIONS
1. The owner invested $97,000 in cash to begin the business.
Investment
Assets: +$97,000 (Cash)
Owner's Equity: +$97,000 (Owner's Capital)
2. Paid $19,750 in cash for the purchase of equipment.
Purchase Equipment (cash)
-$19,750 (Cash)
+$19,750 (Equipment)
3. Purchased additional equipment for $14,400 on credit.
Purchase Equipment (credit)
Assets: +$14,400 (Equipment)
Liabilities: +$14,400 (Accounts Payable)
4. Paid $11,800 in cash to suppliers to buy materials.
Materials Purchase:
-$11,800 (Cash)
+$11,800 (Materials/Inventory)
5. The owner made an additional investment of $30,000 in cash.
Additional Investment
Assets: +$30,000 (Cash)
Owner's Equity: +$30,000 (Owner's Capital)
6. Performed services for $8,200 in cash.
Services Revenue (cash):
Assets: +$8,200 (Cash)
Owner's Equity: +$8,200 (Revenue)
7. Performed services for $6,300 on credit.
Services Revenue (credit):
Assets: +$6,300 (Accounts Receivable)
Owner's Equity: +$6,300 (Revenue)
8. Paid $4,000 for rent expense.
Rent Expense:
Assets: -$4,000 (Cash)
Owner's Equity: -$4,000 (Expense)
9. Received $3,500 in cash from credit clients.
Cash Collection from Receivables:
+$3,500 (Cash)
-$3,500 (Accounts Receivable)
10. Paid $6,460 in cash for office supplies.
Office Supplies:
-$6,460 (Cash)
+$6,460 (Office Supplies)

11. The owner withdrew $9,000 in cash for personal expenses


Owner Withdrawal:
Assets: -$9,000 (Cash)
Owner's Equity: -$9,000 (Owner's Drawings)

Exercise 2: TRANSACTIONS
1. Performed services for $6,680 on credit.

Service Revenue (credit):

Accounts Receivable: +$6,680

Revenue: +$6,680

2. Paid $1,700 in cash for new office chairs.

Office Chairs (cash purchase):

Cash: -$1,700

Equipment/Furniture: +$1,700

3. Received $11,200 in cash from credit clients.

Cash Collection from Receivables:

Cash: +$11,200

Accounts Receivable: -$11,200

4. Paid $880 in cash for telephone service.

Telephone Service Expense:

Cash: -$880

Expense: -$880

5. Paid salaries of $9,700 in cash.


Salary Payment:

Cash: -$9,700

Expense: -$9,700

6. Sent a cash for $1,120 to pay electric bill.

Electric Bill Payment:

Cash: -$1,120

Expense: -$1,120

7. Performed services for $10,500 in cash.

Service Revenue (cash):

Cash: +$10,500

Revenue: +$10,500

8. Paid $2,350 in cash for auto repairs.

Auto Repairs Expense:

Cash: -$2,350

Expense: -$2,350

9. Performed services for $12,500 on account

Service Revenue (on account):

Accounts Receivable: +$12,500

Revenue: +$12,500

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