Online Accounting Course Simple Studies

Accounting Exercise 1.1 (Introduction to Accounting)

Manny Services had the following transactions during periods 20X6 and 20X7. Assume all transactions involve cash receipt or payment.

Transactions for 20X6:

  1. Acquired $4,000 from the owners to begin operations;
  2. Provided services to customers and received $2,000 cash payment;
  3. Borrowed $1,000 from creditors;
  4. Paid operating expenses of $500;
  5. Purchased land for $1,500.

Transactions for 20X7:

  1. Acquired additional $1,000 from the owners;
  2. Performed services and was paid $3,000 in cash;
  3. Paid $500 cash to creditors;
  4. Paid operating expenses of $600;
  5. Made $1,500 cash distribution to the owners.

Required:

Prepare the accounting equation and record effects of each event under the appropriate headings. Use the accounting equation format provided below:

No

Balance Sheet

Income Statement

Statement of Cash Flows

Cash

+

Land

=

L. Pay

+

Cont. Cap.

+

Ret. Earn.

Rev.

-

Exp.

=

Net Inc.