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11 February, 23:01

Assume John Sullivan completed the following additional transactions during February.

(e) Received cash from a client for professional services, $1,500.

(f) Paid office rent for February, $600.

(g) Paid February phone bill, $64.

(h) Withdrew cash for personal use, $1,000.

(i) Performed services for clients on account, $750.

Show the effect of each transaction on the basic elements of the expanded accounting equation: Assets = Liabilities + Owner's Equity (Capital - Drawing Revenues - Expenses).

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Answers (1)
  1. 12 February, 02:39
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    (e) assets (cash) increase by 1,500

    Owner's Equity/Revenues (fees earned) increase by 1,500

    (f) Owner's Equity/Expense (rent expense) increase by 750

    Assets (cash) decrease by 750

    (g) Owner's Equity/Expense (utilities expense) increase by 64

    Assets (cash) decrease by 64

    (i) Assets (Account Receivable) increase by 1,500

    Owner's Equity/Revenues (fees earned) increase by 750

    Explanation:

    Each transaction should at least be compose by 2 accounts, and it will need to be balance,

    We must understand that while expenses decrease the equity the amount of expenses is, increasing when an expense is recognized.
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Home » Business » Assume John Sullivan completed the following additional transactions during February. (e) Received cash from a client for professional services, $1,500. (f) Paid office rent for February, $600. (g) Paid February phone bill, $64.
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