You are presented with the following transactions for A. Rai, a sole proprietorship established in the month of April:

Apr. 1 The owner, A. Rai, invested $27,750 in the business.

2 Purchased equipment for $5,000 by signing a note payable due in three months.

3 Purchased supplies on account for $250.

5 Earned service revenue of $12,250. Of this amount, $6,300 was received in cash. The balance was on account.

10 Paid A. Rai $4,300 for his personal use.

13 Paid the balance owing for supplies purchased on April 3.

15 A customer paid $2,450 in advance for services to be provided next month.

25 Collected the balance from the April 5 transaction.

26 Paid office expense of $1,200.

30 Paid interest of $45 on the note payable signed on April 2.

Instructions

Journalize the August transactions.

TAKING IT FURTHER

Explain the relationship between the normal balance in each type of account and the basic accounting equation.