Answered

Fill in the missing amounts in the balance sheet after the following transactions. You start with [tex] \[tex]$2,500 [/tex] in cash and in owner's equity. You may use one of the following numbers more than once and some may not be used.

a. You purchase testing equipment for [tex] \$[/tex]815 [/tex].
b. You sell a product purchased for [tex] \[tex]$500 [/tex] for [tex] \$[/tex]1,750 [/tex].
c. You receive next month's utility bill for [tex] \[tex]$185 [/tex].
d. You pay the rent by check for [tex] \$[/tex]300 [/tex].



Answer :

GinnyAnswer
Certainly! Let's break down each transaction step by step and see how they affect the cash and owner's equity in the balance sheet.

Initial amounts:
- Cash: \[tex]$2500 - Owner's Equity: \$[/tex]2500

Transaction a: You purchase testing equipment for \[tex]$815. - Decrease in Cash: \$[/tex]2500 - \[tex]$815 = \$[/tex]1685
- The purchase of equipment does not affect Owner's Equity directly.

Balance after transaction a:
- Cash: \[tex]$1685 - Owner's Equity: \$[/tex]2500

Transaction b: You sell a product purchased for \[tex]$500 for \$[/tex]1750.
- Increase in Cash by selling price: \[tex]$1685 + \$[/tex]1750 = \[tex]$3435 - Increase in Owner's Equity by the profit made (selling price - cost): \$[/tex]2500 + (\[tex]$1750 - \$[/tex]500) = \[tex]$2500 + \$[/tex]1250 = \[tex]$3750 Balance after transaction b: - Cash: \$[/tex]3435
- Owner's Equity: \[tex]$3750 Transaction c: You receive next month's utility bill for \$[/tex]185.
- This does not affect Cash immediately, as the bill is not yet paid.
- Decrease in Owner's Equity by the bill amount: \[tex]$3750 - \$[/tex]185 = \[tex]$3565 Balance after transaction c: - Cash: \$[/tex]3435
- Owner's Equity: \[tex]$3565 Transaction d: You pay the rent by check for \$[/tex]300.
- Decrease in Cash: \[tex]$3435 - \$[/tex]300 = \[tex]$3135 - Paying the rent does not further affect Owner's Equity after it was recorded as an obligation. Final balance sheet: - Cash: \$[/tex]3135
- Owner's Equity: \[tex]$3565 So, the missing amounts in the balance sheet after carrying out the transactions would be: - Cash: \$[/tex]3135
- Owner's Equity: \$3565

Other Questions