Chapter 3 .

4 Using T accounts to record transactions involving assets, liabilities, and owner’s equity. The following transactions took place at the profession counseling services business established by Clifford Marshall. Instructions For each transaction, set up T accounts from this list: Cash; Office Furniture; Office Equipment; Automobile; Accounts Payable; Clifford Marshall, Capital; and Clifford Marshall, Drawing. Analyze each transaction. Record the amounts in the T accounts affected by that transaction. Use plus and minus signs to show increases and decreases in each account. Transactions Clifford Marshall invested $30,000 cash in the business. Purchased office furniture for $8,000 in cash. Bought a fax machine for $475; payment is due in 30 days. Purchased a used car for the firm for $8,000 in cash. Marshall invested an additional $5,000 cash in the business. Bought a new computer for $1,500; payment is due in 60 days. Paid $475 to settle the amount owed on the fax machine. Marshall withdrew $2,000 in cash for personal expenses. Analyze: Which transactions affected asset accounts?

Transaction 1 Cash C. Marshall, Capital +30,000 +30,000

Transaction 2 Office Furniture Cash +8,000 +30,000 -8,000

Transaction 3 Office Equipment Accounts Payable +475 +475

Transaction 4 Automobile Cash +8,000 +30,000 -8,000 -8,000

Transaction 5 Cash C. Marshall, Capital +30,000 -8,000 +30,000 +30,000 -8,000 +30,000 +5,000 -8,000 +5,000

Transaction 6 Office Equipment Accounts Payable +475 +475 +475 +475 +1,500 +1,500

Transaction 7 Accounts Payable Cash +475 +30,000 -8,000 +475 +30,000 -8,000 +1,500 +5,000 -8,000 -475 -475

Transaction 8 C. Marshall, Drawing Cash +30,000 -8,000 +5,000 -8,000 +30,000 -8,000 +5,000 -8,000 -475 +2,000 -2,000

Analysis All of the transactions involved asset accounts.