Peter Smith operates a service business called Peter’s Service Company. Peter’s Service Company uses the accounts shown in the following accounting equation. Use the form in your Working Papers to complete this problem.

Transactions: 

1. Paid cash for rent, $300.00. 

2. Paid cash to owner for personal use, $150.00. 

3. Received cash from sales, $800.00. 

4. Paid cash for equipment repairs, $100.00. 

5. Sold services on account to Lisa Lee, $400.00. 

6. Received cash from sales, $650.00. 

7. Paid cash for charitable contributions, $35.00. 

8. Received cash on account from Lisa Lee, $300.00.
Instructions:
For each transaction, complete the following. Transaction | is given as an example.

a. Analyze the transaction to determine which accounts in the accounting equation are affected.

b. Write the amount in the appropriate columns, using a plus (+) if the account increases or a minus (—) if the account decreases.

c. For transactions that change owner’s equity, write in parentheses a description of the transaction to the right of the amount.

d. Calculate the new balance for each account in the accounting equation.

e. Before going on to the next transaction, determine that the accounting equation is still in balance.

Transcribed Image Text:

Assets = Liabilities + Owner's Equity Trans. No. Accts. Rec.- Cash + + Supplies + Lisa Lee Prepaid Insurance Accts. Pay.- Peter Smith, = + Kline Co. Capital Beg. Bal. 625 -0- 375 300 200 1,100 1. 300 300 (expense) New Bal. 325 375 300 200 800 2.