Page Three Part 2 - Problem #1: This problem is worth 5 points. Try to line up the "I", "D" and "NE" under the assets, liabilities and equity the best you can. Based on the transactions noted below, indicate the effect on the accounting equation by using: I= Increase D = Decrease NE = No effect Example: The owner invests $5,000 cash into the business in exchange for stock. Answer: Assets I Liabilities N/E Equity I Note: Do not leave any "blanks" in the answer space, even if it's "N/E. 1) The owner withdraws $2,000 for personal use. Assets Liabilities Equity 2) Equipment costing $7,500 is purchased with cash. Assets Liabilities Equity 3) Equipment costing $2,000 is sold for cash in the amount of $3,000. Assets Liabilities Equity 4) Equipment with a value of $5,000 is invested by the owner in exchange for stock. Assets Liabilities Equity 5) $3,500 of equipment previously purchased and paid for is returned to the vendor. The vendor will refund the money within 30 days. Assets Liabilities Equity