Question

Lisa Vozniak started her own business, We Do Windows. She offers interior and exterior window cleaning for local area residents. Lisa rents a garage to store her tools and cleaning supplies and has a part-time assistant to answer the phone and handle third-story work. (Lisa is afraid of heights.) The transactions for the month of July are as follows:

(a) On the first day of the month, Vozniak invested cash by marketing a deposit in a bank account for the business, $8,000.
(b) Paid rent for July, $150.00
(c) Purchased a used van for cash, $5,000.
(d) Purchased tools on account from Clean Tools, $600.
(e) Purchased cleaning supplies that cost $300. Paid $200 cash and will pay the balance next month, $100.
(f) Paid part-time assistant (wages) for first half of month, $100.
(g) Paid for advertising, $75.
(h) Paid two-years premium for liability insurance on van, $480.
(i) Received cash from clients for services performed, $800.
(j) Performed cleaning services for client on account, $500.
(k) Paid phone bill, $40.
(l) Received cash from clients for window cleaning performed on account in transaction (j), $200.
(m) Paid part-time assistant (wages) for last half of month, $150.
(n) Made partial payment on tools purchased in transaction (d), $200.
(o) Earned additional revenue amounting to $800: $600 in cash and $200 on account.
(p) Vozniak withdrew cash at the end of the month for personal expenses, $100.

Required:

1. Enter the above transactions in an accounting equation similar to the one illustrated below:
Assets = Liabilities + Owner's Equity
(items Owned) (Amounts Owed) (Owner's Investment) + (Earnings)

Cash + Accounts Receivable +Supplies + Prepaid Ins. + Tools + Van = Account Payable +Lisa Vozniak Capital - Lisa Vozniak Drawing + Revenues - Expenses Description

Answer 1

Each transaction affects the accounting equation by altering assets, liabilities, or owner's equity. Transactions are analyzed individually to reflect the changes accurately.

Step-by-step explanation:

To address the student's question about Lisa Vozniak's business transactions, we first need to clearly define and organize each transaction within the accounting equation. We will follow each transaction step by step to ensure a proper understanding of how these activities affect the equation.

Let's consider transaction (a), which is the initial investment:

• Cash increases by $8,000.
• Lisa Vozniak's Capital also increases by $8,000.

The accounting equation is affected as follows:

• Assets = Liabilities + Owner's Equity
• Cash (starting at 0) + $8,000 = 0 + Lisa's Capital (starting at 0) + $8,000

Each subsequent transaction is treated in a similar manner, altering the equation according to the nature of the transaction, whether it's an asset, liability, or owner's equity change.