(a)
Accounting equation represents the relationship between assets, liabilities and shareholders’ equity. It is the foundation of double entry system and it helps to analyze the business transaction. Accounting equation displays the total assets are equal to the total liabilities and shareholders’ equities. Thus, the accounting equation is,
Journal:
Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.
Rules of Debit and Credit:
Following rules are followed for debiting and crediting different accounts while they occur in business transactions:
- Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
- Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.
T-account:
T-account refers to an individual account, where the increases or decreases in the value of specific asset, liability, stockholder’s equity, revenue, and expenditure items are recorded.
This account is referred to as the T-account, because the alignment of the components of the account resembles the capital letter ‘T’.’ An account consists of the three main components which are as follows:
- (a) The title of the account
- (b) The left or debit side
- (c) The right or credit side
To show: The effect of each transaction on the accounting equation and explanation for changes to
(b)
To journalize: the transaction given in the books of T Corporation
(c)
To post: the transaction to T-accounts of T Corporation as on September, 30.
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Financial Accounting: Tools for Business Decision Making, 8th Edition
- Discuss how each of the following transactions for Watson, International, will affect assets, liabilities, and stockholders equity, and prove the companys accounts will still be in balance. A. An investor invests an additional $25,000 into a company receiving stock in exchange. B. Services are performed for customers for a total of $4,500. Sixty percent was paid in cash, and the remaining customers asked to be billed. C. An electric bill was received for $35. Payment is due in thirty days. D. Part-time workers earned $750 and were paid. E. The electric bill in C is paid.arrow_forwardPrepare journal entries to record the following transactions that occurred in April: A. on first day of the month, issued common stock for cash, $15,000 B. on eighth day of month, purchased supplies, on account, $1,800 C. on twentieth day of month, billed customer for services provided, $950 D. on twenty-fifth day of month, paid salaries to employees, $2,000 E. on thirtieth day of month, paid for dividends to shareholders, $500arrow_forwardFollowing are the transactions of JonesSpa Corporation, for the month of January. a. Borrowed $30,000 from a local bank; the loan is due in 9 months. b. Lent $10,000 to an affiliate; accepted a note due in one year. c. Sold to investors 100 additional shares of stock with a par value of $0.10 per share and a market price of $5 per share; received cash. d. Purchased $15,000 of equipment, paying $5,000 cash and signing a note for the rest due in one year. e. Declared $2,000 in cash dividends to stockholders, to be paid in February. For each of the above transactions, indicate the accounts and amounts. A sample is provided. Note: Enter decreases to an element of the balance sheet with a minus sign. a. Cash b. Notes receivable b. C. C. d. d. e. e. Assets Accounts payable Accounts receivable Accrued liabilities payable Additional paid-in-capital 30,000 = Notes payable 10,000 = = = = = = = Liabilities 30,000 + + + + + + + + + Stockholders' Equityarrow_forward
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