David Segal started a business. During the first month (October 20--), the following transactions occurred. (a) Invested cash in the business, $15,000.
(b) Bought office supplies for $3,800: $1,800 in cash and $2,000 on account.
(c) Paid one-year insurance premium, $1,000.
(d) Earned revenues amounting to $2,700: $1,700 in cash and $1,000 on account.
(e) Paid cash on account to the company that supplied the office supplies in transaction (b), $1,800.
(f) Paid office rent for the month, $650.
(g) Withdrew cash for personal use, $150.
REQUIRED:
Show the effect of each transaction on the individual accounts of the expanded accounting equation: Assets = Liabilities + Owner’s Equity (Capital – Drawing + Revenues – Expenses). After transaction (g), report the totals for each element. Demonstrate that the accounting equation has remained in balance.