Worked Example No.2 On Accounting Equation

Refresh your understanding on Debit And Credit Rules/Double Entry/Accounting Equation &
The Accounting Equation in relationship to the Balance Sheet

Worked Examples on Accounting Equation:

Question No 1: Fill In The Blank for the following:

1.0	Assets	Liabilties	Capital
a	40,000	10,000	?
b	15,000	?	11,000
c	?	5,000	10,000
d	11,000	8,000

Answer:

1a $30,000 ($40,000-$10,000)

1b $4,000 ($15,000-$11,000)

1c $15,000 ($5,000+$10,000)

1d $3,000 ($11,000-$8,000)

Question No. 2

The following is the summary data of ABC Ltd for August presented in equation form. Describe each of the transactions that occurred during August.

2.0	ASSET Cash	ASSETS Supplies	ASSETS Equipment	= LIABILITIES	+
a	+$10,000				+$10,000	Capital
b	-$2,000		+$2,000
c	-$200	+$200
d			+$700	$700
e	+$1,000				+$1,000	Income
f	-$600				-$600	Salaries
g	-$300			-$300
h	-$100				-$100	Drawing
	$7,800	$200	$2,700	= $400 +	$10,300

Answer:

2a The owner made an investment by injecting cash as capital

2b Equipment was bought and paid for

2c Supplies were bought and paid for

2d Additional equipment was bought on account creating a liability

2e The company recorded an income for work done for customers

2f The company paid salaries to the workers

2g Cash was paid to reduce amount owing to Accounts Payable(Liability)

2h Owner withdrew cash for her personal use.