Question

On the form provided, identify the accounts affected by each transaction and the amount of increase or decrease in each account. Make sure the accounting equation is in balance after each transaction. 1. Jan Swift, owner, deposited $30,000 in the business checking account. 2. The owner transferred to the business a desk and chair valued at $700. 3. WordService issued a check for $4,000 for the purchase of a computer. 4. The business bought office furniture on account for $5,000 from Eastern Furniture. 5. The desk and chair previously transferred to the business by the owner were sold on account for $700. 6. WordService wrote a check for $2,000 in partial payment of the amount owed to Eastern Furniture Company.

Answer 1

Answer:

1. Jan Swift, owner, deposited $30,000 in the business checking account.

Accounts that increase:

• Cash (Asset) by $30,000
• Common stock (Equity) by $30,000

Accounts that decrease:

• None

2. The owner transferred to the business a desk and chair valued at $700.

Accounts that increase:

• Office furniture (Asset) by $700
• Common stock (Equity) by $700

Accounts that decrease:

• None

3. WordService issued a check for $4,000 for the purchase of a computer.

Accounts that increase:

• Office equipment (Asset) by $4,000

Accounts that decrease:

• Cash (Asset) by $4,000

4. The business bought office furniture on account for $5,000 from Eastern Furniture.

Accounts that increase:

• Office furniture (Asset) by $5,000
• Accounts payable (Liability) by $5,000

Accounts that decrease:

• None

5. The desk and chair previously transferred to the business by the owner were sold on account for $700.

Accounts that increase:

• Accounts receivable (Asset) by $700

Accounts that decrease:

• Office furniture (Asset) b y$700

6. WordService wrote a check for $2,000 in partial payment of the amount owed to Eastern Furniture Company.

Accounts that increase:

• None

Accounts that decrease:

• Cash (Asset) by $2,000
• Accounts payable (Liability) by $2,000

Answer 2

The accounts affected, the amount of increase decrease in each account, and the accounting equation are shown in the attachment below.

What is an accounting equation?

The accounting equation represents the relationship between assets, liabilities, and equity in a business. The relationship can be represented as:

$\rm Assets = Liabilities + Owner's \:Equity$

The accounting equation ensures the dual effect of every transaction and hence promotes accuracy in accounting.

Learn more about the accounting equation here:

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