Analyze the accounting equation effects of the transactions in M2-15 using the format shown in the chapter, and compute total assets, total liabilities, and total shareholders' equity.
In M2-15
Joel Henry founded JHenryBooks.com at the beginning of August, which sells new and used books online. He is passionate about books, but does not have a lot of accounting experi- ence. Help Joel by preparing journal entries for the following events. If the event is not a transaction, write "no transaction."
a. The company purchased equipment for $4,000 cash. The equipment is expected to be used for 10 or more years.
b. Joel's business bought $7,000 worth of books from a publisher. The company will pay the publisher within 45 to 60 days.
c. Joel's friend Sam lent $4,000 to the business. Sam had Joel write a note promising that JHenryBooks.com would repay the $4,000 in four months. Because they are good friends, Sam is not going to charge Joel interest.
d. The company paid $1,500 cash for books purchased on account earlier in the month. e. JHenryBooks.com repaid the $4,000 loan established in (c).