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Determining the Effects of Transactions on the Accounting Equation Instructions Use
Chapter 3, Problem 3-2(choose chapter or problem)
Determining the Effects of Transactions on the Accounting Equation
Instructions Use these accounts to analyze the business transactions of WordService.
On the form provided in your working papers, 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.
Questions & Answers
QUESTION:
Determining the Effects of Transactions on the Accounting Equation
Instructions Use these accounts to analyze the business transactions of WordService.
On the form provided in your working papers, 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:Step 1 of 2
Double Entry System:
The system followed in accounting by the business entity stating that the financial transactions of the business entity affect two or more accounts of the business entity with the same amount but in opposite ways is known as double entry system.