Using the accounting equation to analyze business transactions
Indicate the effects of the following business transactions on the accounting equation for Shane’s Roasted Peanuts, a supplier of snack foods. Transaction (a) is answered as a guide.
a. Shane’s Roasted Peanuts received cash from the owner and gave capital to Shane.
Answer: Increase asset (Cash); Increase equity (Shane, Capital)
b. Cash purchase of land for a building site.
c. Paid cash on accounts payable.
d. Purchased equipment; signed a note payable.
e. Performed service for a customer on account.
f. Employees worked for the week but will be paid next Tuesday.
g. Received cash from a customer on accounts receivable.
h. Borrowed money from the bank.
i. Owner withdrew cash.
j. Incurred utilities expense on account.
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