Zachary Martin owns Zacharys Repair Shop. On February 1, Zacharys Repair Shops accounting equation indicated the following
Question:
Zachary Martin owns Zachary’s Repair Shop. On February 1, Zachary’s Repair Shop’s accounting equation indicated the following account balances. Use the form in your Working Papers to complete this problem.
Transactions:
1. Took $400.00 of supplies for personal use.
2. Had equipment repaired at Kollasch Company and agreed to pay Kollasch Company at a later date, $250.00.
3. Mr. Martin had some personal property, which he sold for $500.00 cash.
4. Paid Kollasch Company $120.00 on account.
Instructions:
1. For each transaction, complete the following.
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.
2. Answer the following questions.
a. Why can the owner of a business withdraw assets from that business for personal use?
b. Why would the owner withdraw assets other than cash?
Step by Step Answer:
