The transactions of a company given here will have an effect on the components of accounting equation. Accounting equation tells us about the assets, liability and capital.
The accounting equation serve as a base of the double entry system as every transaction have two effects in an accounting equation. The assets are equal to the liabilities and owner's equity.
Assets = Liabilities + owner's equity
A. The company completed consulting work for a client and immediately collected $5,600 cash earned.
Assets = Liabilities + owner's equity
$5,600 = 0+ $5,600
The cash and capital are both increasing with the amount of $5,600.
B. The company completed commission work for a client and sent a bill for $4,100 to be received within 30 days.
Assets = Liabilities + owner's equity
$4,100 = 0 + $4,100
The bills receivable is an asset and the capital is also increasing.
C. The company paid an assistant $1,450 cash as wages for the period.
Assets = Liabilities + owner's equity
($1,450)= 0 + ($1,450)
Payment results in reduction of cash as well as the equity.
D. The company collected $2,050 cash as a partial payment for the amount owed by the client in transaction.
Assets = Liabilities + owner's equity
$2,050 = 0 + $2,050
Collection of cash increases the cash as well as the owner's equity.
E. The company paid $720 cash for this period's cleaning services.
Assets = Liabilities + owner's equity
($720) = 0 + ($720)
Payment results in reduction of cash as well as the equity.
Therefore , the transactions completed by the company is shown in the accounting equations.
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