Question

On July 1, Tommy Wrigley established Wrigley Home Appraisal Services, a firm that provides expert residential appraisals and represents clients in home appraisal hearings. TRANSACTIONS The owner invested $94,000 in cash to begin the business. Paid $19,150 in cash for the purchase of equipment. Purchased additional equipment for $13,200 on credit. Paid $11,200 in cash to creditors. The owner made an additional investment of $27,000 in cash. Performed services for $7,600 in cash. Performed services for $5,100 on account. Paid $3,400 for rent expense. Received $2,900 in cash from credit clients. Paid $5,860 in cash for office supplies. The owner withdrew $8,400 in cash for personal expenses. Record in equation form the changes that occur in assets, liabilities, and owner’s equity for the above transactions.

Answer 1

The bold letters indicate the changes made and the effects of the transactions.

Where OE= Owner's Equity

AR = Account Receivable

R= revenue

E= expenses

Asset = Liabilities + Owner's Equity

a Cash = OE

+ 94,000= + 94,000

b Asset = Liabilities + Owner's Equity

Cash + Equipment = OE

+ 94,000 = + 94,000

- 19150 + 1950 =

New

Balance 74,850 + 19150 = 94000

c. Asset = Liabilities + Owner's Equity

Cash+ Equipment = Accounts Payable + OE

74,850 + 19150+ 13,200 = 13,200 + 94000

d. Asset = Liabilities + Owner's Equity

Cash+ Equipment = Accounts Payable + OE

74,850 + 19150+ 13,200 = 13,200 + 94000

-11,200 = 11,200

+ 19150+ 13,200 = 2000 + 94000

e Asset = Liabilities + Owner's Equity

Cash+ Equipment = Accounts Payable + OE

74,850 + 19150+ 13,200 = 2000 + 94000

27,000 = 27000

101,850 +19150+ 13,200 = 2000 + 121,000

f. Asset = Liabilities + Owner's Equity + Revenue

Cash+ Equipment = Accounts Payable + OE + R

101,850 +19150+ 13,200 = 2000 + 121,000 + 7600

7600 .

109450+19150+ 13,200 = 2000 + 121,000 + 7600

g. Asset = Liabilities + Owner's Equity + Revenue

Cash+ Equipment + AR = Accounts Payable + OE + R

101,850 + 32350+ 5100 = 2000 + 121,000 + 7600 + 5100

101,850 + 32350+ 5100 = 2000 + 121,000 + 12700

h. Asset = Liabilities + Owner's Equity + Revenue -Expenses

Cash+ Equipment + AR = Accounts Payable + OE + R- E

101,850 (- 3400)+ 32350+ 5100 = 2000 + 121,000 + 12700- 3400

98450+ 32350+ 5100 = 2000 + 121,000 + 12700- 3400

i. Asset = Liabilities + Owner's Equity + Revenue -Expenses

Cash+ Equipment + AR = Accounts Payable + OE + R- E

98450( + 2900)+ 32350+ 5100(-2900) = 2000 + 121,000 + 12700- 3400

101350 + 32350+ 2200= 2000 + 121,000 + 12700- 3400

j. Asset = Liabilities + Owner's Equity + Revenue -Expenses

Cash+ Equipment + AR + Office Supplies = Accounts Payable + OE + R- E

101350(- 5860) + 32350+ 2200 + 5860= 2000 + 121,000 + 12700- 3400

k. Asset = Liabilities + Owner's Equity + Revenue -Expenses

Cash+ Equipment + AR + Office Supplies = Accounts Payable + OE + R- E

101350 + 32350+ 2200 + 5860= 2000 + 121,000 + 12700- 3400

-8400 -8400

92950 + 32350+ 2200 + 5860= 2000 + 121,000 + 12700- 11800