Chapter 1, Problem 8E

(a)

To determine

Accounting Equation: Accounting equation refers to the equation which is based on the double entry system of accounting. This implies that if there is a change in the assets of the entity, there will be a corresponding effect on the liabilities or owner’s equity of the entity also. The accounting equation is as follows:

$\text{Assets}=\text{Liabilities}+\text{Owner's}\text{Equity}$

Assets: Assets refer to those resources that an organization owns, against which the organization derives a value in the future.

Liabilities: Liabilities refer to the debts owed by an organization towards the parties from whom the amounts are borrowed.

Owner’s Equity: Owner’s equity refers to an amount raised from the public in order to finance the business of a company. The equity holders are referred to as the owners of the business.

Net Income: Net income refers to the difference between the expenses incurred by an organization to run the business and the revenues earned by it.

To Describe: Transaction occurred

(b)

To determine

increase in owner’s equity

(c)

To determine

amount of net income