1. Sample Problem
Chapter 2

2. 4 Analyzing the effects of transactions on the accounting equation.
On September 1, Mireya Cortez opened Self Images Tutoring Service.
Instructions
Analyze the following transactions. Use the fundamental accounting equation form to record the changes in property, claims of creditors, and owner’s equity. (Use plus, minus, and equals signs.)
Transactions
The owner invested $9,000 in cash to begin the business.
Purchased equipment for $4,000 in cash.
Purchased $1,500 of additional equipment on credit.
Paid $750 in cash to creditors.
The owner made an additional investment of $1,500 in cash.
Performed services for $1,080 in cash.
Performed services for $780 on account.
Paid $650 for rent expense.
Received $550 in cash from credit clients.
Paid $775 in cash for office supplies.
The owner withdrew $1,000 in cash for personal expenses.

3. Assets = Liabilities + Owner’s Equity
Transaction #1
Assets = Liabilities + Owner’s Equity
Cash
+$9, $9,000

4. Assets = Liabilities + Owner’s Equity
Transaction #2
Assets = Liabilities + Owner’s Equity
Cash
$9, $9,000
Equipment
+ 4,000
- 4,000

5. Assets = Liabilities + Owner’s Equity
Transaction #3
Assets = Liabilities + Owner’s Equity
Cash
9,000
-4,000
5,000
Equipment
4, ,000
Equipment Account Payable
+1, ,500

6. Assets = Liabilities + Owner’s Equity
Transaction #4
Assets = Liabilities + Owner’s Equity
Cash
5,000
Equipment
4,000
+1,500 Accounts Payable
5,500 1, ,000
Cash Accounts Payable

7. Assets = Liabilities + Owner’s Equity
Transaction #5
Assets = Liabilities + Owner’s Equity
Cash Account Payable
5,000 1,500 4,
Equipment
5, ,000
Cash Investment
+1, ,500

8. Assets = Liabilities + Owner’s Equity
Transaction #6
Assets = Liabilities + Owner’s Equity
Cash
4, ,000
+1, ,500
5, ,500
Equipment Accounts Payable 5,
Cash Revenue
+1, ,080

9. Assets = Liabilities + Owner’s Equity
Transaction #7
Assets = Liabilities + Owner’s Equity
Cash
5, ,500
+1, ,080
6, ,580
Equipment Accounts Payable 5,
Account Receivable Revenue

10. Assets = Liabilities + Owner’s Equity
Transaction #8
Assets = Liabilities + Owner’s Equity
Cash
6,830
Account Receivable ,580
Equipment Account Payable 12,360 5,
Cash Expense

11. Assets = Liabilities + Owner’s Equity
Transaction #9
Assets = Liabilities + Owner’s Equity
Cash
6, ,360
6, ,710
Accounts Receivable
780
Equipment Accounts Payable 5,
+550
Account Receivable
-550

12. Assets = Liabilities + Owner’s Equity
Transaction #10
Assets = Liabilities + Owner’s Equity
Cash
6,180
+ 550
6,730
Accounts Receivable
780
-550
230
Equipment Accounts Payable
5, ,710
-775
Supplies
+775

13. Assets = Liabilities + Owner’s Equity
Transaction #11
Assets = Liabilities + Owner’s Equity
Cash
6,730
- 775
5,955
Accounts Receivable
230
Equipment
5,500
Supplies Accounts Payable
,710
Cash Withdrawal
-1, ,000

14. Assets = Liabilities + Owner’s Equity
Final Balances
Assets = Liabilities + Owner’s Equity
Cash Accounts Payable
5, ,710
-1, ,000
4, ,710
Accounts Receivable
230
Equipment
5,500
Supplies
775

15. Analysis
Transaction 3 increased the company’s debt by $1,500