part four—analyzing how transactions change owner’s equity in an accounting equation\ndirections: for each…

part four—analyzing how transactions change owner’s equity in an accounting equation\ndirections: for each of the following transactions, select the two accounts in the accounting equation that are changed. decide if each account is increased or decreased. place a \+\ in the column if the account is increased. place a \-\ in the column if the account is decreased.\ntransactions\n1 - 2 received cash from sales (p. 18)\n3 - 4 sold services on account to new u fitness (p. 18)\n5 - 6 paid cash for rent (p. 19)\n7 - 8 paid cash for telephone bill (p. 19)\n9 - 10 received cash on account from new u fitness (p. 20)\n11 - 12 paid cash to owner a. conrad for personal use (p. 20)\n| trans. no. | assets = liabilities + owner’s equity |\n| ---- | ---- |\n| | cash + accts. rec.—new u fitness + supplies + prepaid insurance = accts. pay.—hardcore fitness supplies + a. conrad, capital |\n| 1 - 2 | |\n| 3 - 4 | |\n| 5 - 6 | |\n| 7 - 8 | |\n| 9 - 10 | |\n| 11 - 12 | |

part four—analyzing how transactions change owner’s equity in an accounting equation\ndirections: for each of the following transactions, select the two accounts in the accounting equation that are changed. decide if each account is increased or decreased. place a \+\ in the column if the account is increased. place a \-\ in the column if the account is decreased.\ntransactions\n1 - 2 received cash from sales (p. 18)\n3 - 4 sold services on account to new u fitness (p. 18)\n5 - 6 paid cash for rent (p. 19)\n7 - 8 paid cash for telephone bill (p. 19)\n9 - 10 received cash on account from new u fitness (p. 20)\n11 - 12 paid cash to owner a. conrad for personal use (p. 20)\n| trans. no. | assets = liabilities + owner’s equity |\n| ---- | ---- |\n| | cash + accts. rec.—new u fitness + supplies + prepaid insurance = accts. pay.—hardcore fitness supplies + a. conrad, capital |\n| 1 - 2 | |\n| 3 - 4 | |\n| 5 - 6 | |\n| 7 - 8 | |\n| 9 - 10 | |\n| 11 - 12 | |

Answer

Explanation:

Step1: Analyze transaction 1 - 2

Received cash from sales increases Cash (Asset) and increases Owner's Equity (through revenue). So in the table for 1 - 2, Cash gets a "+", and A. Conrad, Capital gets a "+".

Step2: Analyze transaction 3 - 4

Sold services on account to New U Fitness increases Accounts Receivable - New U Fitness (Asset) and increases Owner's Equity (through revenue). So for 3 - 4, Accts. Rec. - New U Fitness gets a "+", and A. Conrad, Capital gets a "+".

Step3: Analyze transaction 5 - 6

Paid cash for rent decreases Cash (Asset) and decreases Owner's Equity (through an expense). So for 5 - 6, Cash gets a "-", and A. Conrad, Capital gets a "-".

Step4: Analyze transaction 7 - 8

Paid cash for telephone bill decreases Cash (Asset) and decreases Owner's Equity (through an expense). So for 7 - 8, Cash gets a "-", and A. Conrad, Capital gets a "-".

Step5: Analyze transaction 9 - 10

Received cash on account from New U Fitness increases Cash (Asset) and decreases Accounts Receivable - New U Fitness (Asset). So for 9 - 10, Cash gets a "+", and Accts. Rec. - New U Fitness gets a "-".

Step6: Analyze transaction 11 - 12

Paid cash to owner for personal use decreases Cash (Asset) and decreases Owner's Equity (through a drawing). So for 11 - 12, Cash gets a "-", and A. Conrad, Capital gets a "-".

Answer:

Trans. No. Cash Accts. Rec. - New U Fitness Supplies Prepaid Insurance Accts. Pay. - Hardcore Fitness Supplies A. Conrad, Capital
1 - 2 + +
3 - 4 + +
5 - 6 - -
7 - 8 - -
9 - 10 + -
11 - 12 - -