3/21/2021 Assignment Print View

Points you may earn on instructor-graded questions: 14 pts

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3/21/2021 Assignment Print View
 
1. Award: 14 out of 14.00 points
 

Problem 3-8 Determining the Effects of Transactions on the Accounting Equation

After graduating from college, Abe Shultz decided to start a pet grooming service called Kits & Pups
Grooming.

Date Transactions
Jan. 2 1. Abe Shultz began the business by depositing $10,000 in a checking account at the
Shoreline National Bank in the name of the business, Kits & Pups Grooming.
3 2. Bought grooming equipment for cash, $1,000.
8 3. Issued a check for $900 for the monthly rent.
9 4. Bought $6,000 worth of new office equipment on account for use in the business.
15 5. Received $700 cash for services performed for customers during the first week of business.
21 6. Issued a $2,000 check to the creditor as partial payment for the office equipment
purchased on account.
29 7. Performed grooming services and agreed to be paid for them later, $500.

1. For each of the above transactions:

• Identify the accounts affected, using the account names on the form.
• Determine the amount of the increase or decrease for each account.
• Enter the amount of the increase or decrease in the space under each account affected. Enclose in
parentheses amounts that decrease account balances.
• On the following line, enter the new balance for each account.
• Transaction 1 is completed as an example.

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3/21/2021 Assignment Print View

Owner’s
Assets = Liabilities +
Equity
Cash in Accounts Office Grooming Accounts Abe Shultz,
Transaction = +
Bank Receivable Equipment Equipment Payable Capital
1. $ 10,000 $ 0 $ 0 $ 0 $ 0 $ 10,000
Balance 10,000  0  0   =  + 10,000 

2. (1,000)  0  0  1,000   

Balance 9,000  0  0  1,000  =  + 10,000 

3. (900)  0  0    (900) 

Balance 8,100  0  0  1,000  =  + 9,100 

4. 0  0  6,000   6,000  

Balance 8,100  0  6,000  1,000  = 6,000  + 9,100 

5. 700  0  0    700 

Balance 8,800  0  6,000  1,000  = 6,000  + 9,800 

6. (2,000)  0  0   (2,000)  

Balance 6,800  0  6,000  1,000  = 4,000  + 9,800 

7. 0  500  0    500 

Balance $ 6,800  $ 500  $ 6,000  $ 1,000  = $ 4,000  + $ 10,300 

2. Explain the difference between Transaction 5 and Transaction 7. (This item will be manually graded by
your teacher.)

In Transaction 5, the customer is paying in cash, whereas in Transaction

7 their paying with credit

Problem 3-8 Determining the Effects of Transactions on the Accounting Equation

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3/21/2021 Assignment Print View
After graduating from college, Abe Shultz decided to start a pet grooming service called Kits & Pups
Grooming.

Date Transactions
Jan. 2 1. Abe Shultz began the business by depositing $10,000 in a checking account at the
Shoreline National Bank in the name of the business, Kits & Pups Grooming.
3 2. Bought grooming equipment for cash, $1,000.
8 3. Issued a check for $900 for the monthly rent.
9 4. Bought $6,000 worth of new office equipment on account for use in the business.
15 5. Received $700 cash for services performed for customers during the first week of business.
21 6. Issued a $2,000 check to the creditor as partial payment for the office equipment
purchased on account.
29 7. Performed grooming services and agreed to be paid for them later, $500.

1. For each of the above transactions:

• Identify the accounts affected, using the account names on the form.
• Determine the amount of the increase or decrease for each account.
• Enter the amount of the increase or decrease in the space under each account affected. Enclose in
parentheses amounts that decrease account balances.
• On the following line, enter the new balance for each account.
• Transaction 1 is completed as an example.

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3/21/2021 Assignment Print View

Assets = Liabilities + Owner’s Equity

Cash in Accounts Office Grooming Accounts Abe Shultz,
Transaction = +
Bank Receivable Equipment Equipment Payable Capital
1. $ 10,000 $ 0 $ 0 $ 0 $ 0 $ 10,000
Balance 10,000 = + 10,000
2. (1,000) 1,000
Balance 9,000 1,000 = + 10,000
3. (900) (900)
Balance 8,100 1,000 = + 9,100
4. 6,000 6,000
Balance 8,100 6,000 1,000 = 6,000 + 9,100
5. 700 700
Balance 8,800 6,000 1,000 = 6,000 + 9,800
6. (2,000) (2,000)
Balance 6,800 6,000 1,000 = 4,000 + 9,800
7. 500 500
Balance $ 6,800 $ 500 $ 6,000 $ 1,000 = $ 4,000 + $ 10,300

2. Explain the difference between Transaction 5 and Transaction 7. (This item will be manually graded by
your teacher.)

 
Explanation:

Transaction 5 is a cash transaction. Transaction 7 is a credit transaction.

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