chapter 3. using t accounts to record transactions involving assets, liabilities, and owner’s...
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Chapter 3Chapter 3Chapter 3Chapter 3..
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Using T accounts to record transactions involving assets, liabilities, and owner’s equity.
The following transactions took place at the profession counseling services business established by Clifford Marshall.
InstructionsFor each transaction, set up T accounts from this list: Cash; Office Furniture; Office Equipment; Automobile;
Accounts Payable; Clifford Marshall, Capital; and Clifford Marshall, Drawing. Analyze each transaction. Record the amounts in the T accounts affected by that transaction. Use plus and minus signs to show increases and decreases in each account.
Transactions1. Clifford Marshall invested $30,000 cash in the business. 2. Purchased office furniture for $8,000 in cash. 3. Bought a fax machine for $475; payment is due in 30 days. 4. Purchased a used car for the firm for $8,000 in cash. 5. Marshall invested an additional $5,000 cash in the business. 6. Bought a new computer for $1,500; payment is due in 60 days. 7. Paid $475 to settle the amount owed on the fax machine. 8. Marshall withdrew $2,000 in cash for personal expenses.Analyze: Which transactions affected asset accounts?
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Transaction 1 Cash C. Marshall, Capital
+30,000 +30,000
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Transaction 2Office Furniture Cash+8,000 +30,000 -8,000
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Transaction 3Office Equipment Accounts
Payable+475 +475
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Transaction 4Automobile Cash+8,000 +30,000 -8,000
-8,000
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Transaction 5 Cash C. Marshall,
Capital+30,000 -8,000 +30,000+5,000 -8,000 +5,000
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Transaction 6Office Equipment Accounts
Payable +475 +475+1,500 +1,500
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Transaction 7 Accounts Payable Cash
+475 +30,000 -8,000
+1,500 +5,000 -8,000-475 -475
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Transaction 8 C. Marshall, Drawing Cash
+30,000 -8,000 +5,000 -8,000
-475
+2,000 -2,000
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AnalysisAll of the transactions involved
asset accounts.