DISCUSSION FOR SEMINAR 3 & 4

ANALYSING BUSINESS TRANSACTIONS

1- For each of the following events, assume the events are in order:

a) Owner invested $50,000 cash into the business.

b) Purchased $400 of supplies on account.
c) Purchased equipment for $1,600 on account.
d) Earned $1000 of revenue by performing a service for cash.
e) Received utilities bill for $500, to be paid in the following period.
f) Performed services for a customer valued at $3000 on account.
g) Paid salaries to employees of $5,000.
h) Purchased equipment for $5,000 cash.
i) Collected $1,500 from a customer on an account receivable.

i- indicate the amount by which total assets increased or decreased;

ii- indicate effect on other accounts;
iii- show journal entries and prepare a trial balance for the transactions.

2- For each of the following events, assume the events are in order:

a) Owner invested cash of $25,000 and equipment valued at $10,500 into the business.
b) Purchased $600 of supplies on account.
c) Borrowed $10,000 from the bank, issuing a note payable.
d) Performed a service for $1,500 and immediately collected the cash.
e) Paid the employee salaries of $1,200.
f) Purchased equipment for $550 cash.
g) Received monthly rent bill of $1,300, to be paid in the following period.
h) Performed a service on account for $2,300.

i. indicate the amount by which liabilities increased or decreased;

ii. indicate effect on other accounts;
iii. show journal entries and prepare a trial balance for the transactions.

3- State the effect on the accounting equation of each transaction below for Mac's
Garage and prepare a trial balance after attending to the events.

a) George McGuire invests $20,000 cash into a business known as Mac's Garage.
b) George purchases auto supplies on account for $500.
c) George purchases auto repair equipment for $6,500 cash.
d) George receives and pays the garage’s utilities bill amounting to $425.
e) Garage revenue for the current period amounts to $3,500, cash.

PRINCIPLES OF ACCOUNTING/DR HASLIDA ABU HASAN/ DISCUSSION 3/ Page 1 of 4

4. Following is a list of events for Pools Unlimited for the month of June. Show the effects of these events
on the accounting equation by completing the table below.
June 1 Owner invested $50,000 cash and equipment valued at $25,000 into the business.
3 Purchased $5,500 of equipment on account.
5 Purchased $400 of supplies for cash.
10 Bought a truck, paying $4,000 in cash and signing a note for $11,000.
14 Performed services for a customer for $1,850 cash.
15 Paid employee wages of $1,200.
18 Paid $2,000 on the equipment purchased on June 3.
24 Performed services for a customer on account, $2,500.
27 Collected $500 from the customer of June 24.
30 Owner withdrew $900 for personal use.

Date Cash A/R Supp. Equip. Truck A/P N/P Capital

June 1
3
5
10
14
15
18
24
27
30
Total

5. Unique Realtors prepared the following random list of assets, liabilities, revenues, and expenses from
their December 31, 20X7, accounting records. The beginning capital as of January 1, 19X7, was $33,200
and the owner, Quite Unique, withdrew $11,600 cash for personal use during the year.

Accounts receivable $13,600

Service revenue 45,800
Interest expense 1,400
Cash 5,200
Supplies 4,900
Note payable 15,000
Furniture 16,500
Account payable 3,500
Salary expense 18,300
Utilities expense 4,900
Interest payable 600
Rent expense 9,400
Salary payable 1,200
Automobile 13,500
Prepare a statement of owner's equity for the year ended December 31, 20X7.

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