Marion Cassidy operates a service business called Cassidy Company. Cassidy Company uses the accounts shown in the
Question:
Marion Cassidy operates a service business called Cassidy Company. Cassidy 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. $400.00.
2. Received cash from owner as an investment, $500.00.
3. Paid cash for telephone bill. $50.00.
4. Received cash from sales, $1,025.00.
5. Bought supplies on account from Delta Company, $450.00.
6. Sold services on account to Ana Santiago, $730.00.
7. Paid cash for advertising, $660.00.
8. Paid cash for supplies, $150.00.
9. Received cash on account from Ana Santiago, $400.00.
10. Paid cash on account to Delta Company, $1,500.00.
11. Paid cash for one month of insurance, $100.00.
12. Received cash from sales, $1,230.00.
13. Paid cash to owner for personal use, $1,200.00.
Instructions:
For each transaction, complete the following. Transaction 1 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.
Step by Step Answer:
