A service proprietorship shows five transactions summarized below.

The effect of each

transaction on the accounting equation is shown, and also the new balance of each item in the
equation. For each transaction (a) to (e) write an explanation of the nature of the transaction.
Accounts Equip- Accounts Owner’s
Cash + Rec. + ment + Land + Building = Payable + Capital
——————————————————————————————————————————
$5,000 $6,500 $10,000 $7,500 $50,000 $3,000 $76,000
a) –2,000 –2,000
3,000 6,500 10,000 7,500 50,000 3,000 74,000
b) +1,500 – 1,500
4,500 5,000 10,000 7,500 50,000 3,000 74,000
c) + 6,000 +6,000
4,500 5,000 16,000 7,500 50,000 9,000 74,000
d) +2,500 + 2,500
7,000 5,000 16,000 7,500 50,000 9,000 76,500
e) +4,000 + 4,000
$7,000 $9,000 $16,000 $7,500 $50,000 $9,000 $80,500