1. 1Transaction Analysis, Chapt 3 Transaction Analysis, Chapter 3, p. 49-59 Practice Q: p. 59 & 60 ex. #1,2,3 BUSINESS TRANSACTION: examples:

2. 2Transaction Analysis, Chapt 3 Simplified balance sheet of Mary Anne’s Bicycles MARY ANNE'S BICYCLES MARY ANNE'S BICYCLES BALANCE SHEET BALANCE SHEET DECEMBER 31, 2--- DECEMBER 31, 2--- ASSETSLIABILITIES Cash 50,000 50,000 Accounts payable Accounts Receivable Easton Ind. 40,000 40,000 GT Industries 20,000 20,000 Shimano Inc. 55,000 55,000 Tron Corp. 80,000 80,000 Taxes Payable 10,000 10,000 Inventory 150,000 150,000 Mortgage Payable 300,000 300,000 Land 125,000 125,000 Total Liabilities 405,000 405,000 Building & Equipment 440,000 440,000 OWNERS' EQUITY Mary Anne Capital 200,000 200,000 Retained earnings 260,000 260,000 Total Owners' Equity 460,000 460,000 Total Assets 865,000 865,000 Total OE & L 865,000 865,000

3. Transaction Analysis, Chapt 3 3  Any financial business transaction will effect and change the assets, liabilities and owner’s equity of the balance sheet… to understand how transactions effect the assets, liabilities and owner's equity, lets change the layout of the balance sheet into a working paper called the “accounting equation analysis sheet  See the spreadsheet HO

4. 4Transaction Analysis, Chapt 3 Transaction 1: Mary Anne’s Bicycles pays $35,000 to Easton Ind.  what accounts will be effected? Will the accounts increase or decrease? Complete the transaction analysis table EQUATION ANALYSIS SHEET ASSETS=LIABILITIES+O.E. TransactionCashA/R Inventory Build. & Equip. A/P TaxesMortgageMA GTTron EastonShimano opening balance opening balance500002000080000150000440000400005500010000300000460000 Transaction 1 Transaction 1(35,000) (35,000) balance 150002000080000150000440000 50005500010000300000460000

5. 5Transaction Analysis, Chapt 3 Transaction 2: GT Ind. Pays Mary Anne’s $15,000 of the $20,000 owed to Mary Annes’ Bicycles.  what accounts will be effected? Will the accounts increase or decrease? Complete the transaction analysis table EQUATION ANALYSIS SHEET ASSETS=LIABILITIES+O.E. TransactionCashA/R A/RInventory Build. & Equip. A/P A/PTaxesMortgageMary (bank)GTTron EastonShimano owing Anne balance 150002000080000150000440000 50005500010000300000460000 Transaction 2 balance

6. 6Transaction Analysis, Chapt 3 Transaction 3: Equipment costing $23,000 is purchased for cash!  what accounts will be effected? Will the accounts increase or decrease? Complete the transaction analysis table EQUATION ANALYSIS SHEET ASSETS=LIABILITIES+O.E. TransactionCashA/R A/RInventory Build. & Equip. A/P A/PTaxesMortgageMary (bank)GTTron EastonShimano owing Anne balance 30000500080000150000440000 50005500010000300000460000 Transaction 3 balance

7. 7Transaction Analysis, Chapt 3 Transaction 4: A new delivery truck is purchased for $45,000. $10,000 is paid in cash, the remainder is borrowed.  what accounts will be effected? Will the accounts increase or decrease? Complete the transaction analysis table EQUATION ANALYSIS SHEET ASSETS=LIABILITIES+O.E. TransactionCashA/R A/RInventory Build. & Equip. A/P A/PTaxesMortgageMary (bank)GTTron EastonShimano owing Anne balance7000500080000150000463,000 50005500010000300000460000 Transaction 4 balance

8. 8Transaction Analysis, Chapt 3 Transaction 5: Mary Anne’s sells $26,000 of bicycles in inventory to Tron. Corp. Mary Anne invoices Tron for the selling price of $40,000 (they send Tron the bill).  what accounts will be effected? Will the accounts increase or decrease? Complete the transaction analysis table EQUATION ANALYSIS SHEET ASSETS=LIABILITIES+O.E. TransactionCashA/R A/RInventory Build. & Equip. A/P A/PTaxesMortgageMary (bank)GTTron EastonShimano owing Anne balance(3,000)500080000150000508000 50005500010000335,000460000 Transaction 5 balance

9. 9Transaction Analysis, Chapt 3 Transaction 6: Tron Corp. Pays Mary Anne’s $45,000  what accounts will be effected? Will the accounts increase or decrease? Complete the transaction analysis table EQUATION ANALYSIS SHEET ASSETS=LIABILITIES+O.E. TransactionCashA/R A/RInventory Build. & Equip. A/P A/PTaxesMortgageMary (bank)GTTron EastonShimano owing Anne balance(3,000)5000120,000124,000508000 50005500010000335,000474,000 Transaction 6 balance

10. 10Transaction Analysis, Chapt 3 Transaction 7:Mary Anne (the owner) withdraws $20,000 for personal use.  this is called drawings or dividends  what accounts will be effected? Will the accounts increase or decrease? Complete the transaction analysis table EQUATION ANALYSIS SHEET ASSETS=LIABILITIES+O.E. TransactionCashA/R A/RInventory Build. & Equip. A/P A/PTaxesMortgageMary (bank)GTTron EastonShimano owing Anne balance42,000500075,000124,000508000 50005500010000335,000474,000 Transaction 7 balance

11. 11Transaction Analysis, Chapt 3 Transaction 8: A leak in the warehouse roof is repaired; the cost is $8000 and is paid in cash  what accounts will be effected? Will the accounts increase or decrease? Complete the transaction analysis table EQUATION ANALYSIS SHEET ASSETS=LIABILITIES+O.E. TransactionCashA/R A/RInventory Build. & Equip. A/P A/PTaxesMortgageMary (bank)GTTron EastonShimano owing Anne balance22,000500075,000124,000508000 50005500010000335,000454,000 Transaction 3 balance

12. 12Transaction Analysis, Chapt 3 Use the final values from the transaction analysis sheet to update Mary Anne’s Balance sheet: MARY ANNE'S BICYCLES MARY ANNE'S BICYCLES BALANCE SHEET BALANCE SHEET DECEMBER 31, 2--- DECEMBER 31, 2--- ASSETSLIABILITIES Cash Accounts payable Accounts Receivable Easton Ind. GT Industries Shimano Inc. Tron Corp. Taxes Payable Inventory Mortgage Payable Land 125,000 125,000 Total Liabilities Building & Equipment OWNERS' EQUITY Mary Anne Capital Total Owners' Equity Total Assets Total OE & L