1transaction analysis, chapt 3 transaction analysis, chapter 3, p. 49-59 practice q: p. 59 & 60...

11Transaction Analysis, Chapt 3Transaction Analysis, Chapt 3

Transaction AnalysisTransaction Analysis, , Chapter 3, p. 49-59Chapter 3, p. 49-59

Practice Q: p. 59 & 60 ex. #1,2,3Practice Q: p. 59 & 60 ex. #1,2,3

BUSINESS TRANSACTIONBUSINESS TRANSACTION::

examples:examples:


Simplified balance sheet of Mary Anne’s BicyclesSimplified balance sheet of Mary Anne’s Bicycles

MARY ANNE'S BICYCLES MARY ANNE'S BICYCLES

BALANCE SHEET BALANCE SHEET

DECEMBER 31, 2--- DECEMBER 31, 2---

ASSETSASSETS LIABILITIESLIABILITIES

CashCash 50,000 50,000 Accounts payableAccounts payable

Accounts ReceivableAccounts Receivable Easton Ind.Easton Ind. 40,000 40,000

GT IndustriesGT Industries 20,000 20,000 Shimano Inc.Shimano Inc. 55,000 55,000

Tron Corp.Tron Corp. 80,000 80,000 Taxes PayableTaxes Payable 10,000 10,000

InventoryInventory 150,000 150,000 Mortgage PayableMortgage Payable 300,000 300,000

LandLand 125,000 125,000 Total LiabilitiesTotal Liabilities 405,000 405,000

Building & EquipmentBuilding & Equipment 440,000 440,000

OWNERS' EQUITYOWNERS' EQUITY

Mary Anne CapitalMary Anne Capital 200,000 200,000

Retained earningsRetained earnings 260,000 260,000

Total Owners' EquityTotal Owners' Equity 460,000 460,000

Total AssetsTotal Assets 865,000 865,000 Total OE & LTotal OE & L 865,000 865,000

Transaction Analysis, Chapt 3Transaction Analysis, Chapt 3 33

Any financial business transaction Any financial business transaction will effect and change the assets, will effect and change the assets, liabilities and owner’s equity of the liabilities and owner’s equity of the balance sheet… to understand how balance sheet… to understand how transactions effect the assets, transactions effect the assets, liabilities and owner's equity, lets liabilities and owner's equity, lets change the layout of the balance change the layout of the balance sheet into a working paper called the sheet into a working paper called the ““accounting equation analysis accounting equation analysis sheetsheet

See the spreadsheet HOSee the spreadsheet HO


Transaction 1: Mary Anne’s Bicycles pays $35,000 to Easton Ind.Transaction 1: Mary Anne’s Bicycles pays $35,000 to Easton Ind.

what accounts will be effected? Will the accounts increase or what accounts will be effected? Will the accounts increase or decrease?decrease?

Complete the transaction analysis tableComplete the transaction analysis table

EQUATION ANALYSIS SHEETEQUATION ANALYSIS SHEET

ASSETSASSETS == LIABILITIESLIABILITIES ++ O.E.O.E.

TransactionTransaction CashCash A/RA/R InventoryInventory Build. & EquipBuild. & Equip. . A/PA/P Taxes Taxes MortgageMortgage MAMA

GT GT Tron Tron EastonEaston ShimanoShimano

opening balanceopening balance 5000050000 2000020000 8000080000 150000150000 440000440000 4000040000 5500055000 1000010000 300000300000 460000460000

Transaction 1Transaction 1 (35,000)(35,000) (35,000)(35,000)

balancebalance 1500015000 2000020000 8000080000 150000150000 440000440000 50005000 5500055000 1000010000 300000300000 460000460000


Transaction 2: GT Ind. Pays Mary Anne’s $15,000 of the $20,000 owed Transaction 2: GT Ind. Pays Mary Anne’s $15,000 of the $20,000 owed to Mary Annes’ Bicycles.to Mary Annes’ Bicycles.





TransactionTransaction CashCash A/RA/R A/RA/R InventoryInventory Build. & EquipBuild. & Equip. . A/PA/P A/PA/P Taxes Taxes MortgageMortgage MaryMary

(bank)(bank) GT GT Tron Tron EastonEaston ShimanoShimano owingowing Anne Anne

balancebalance 1500015000 2000020000 8000080000 150000150000 440000440000 50005000 5500055000 1000010000 300000300000 460000460000

Transaction 2Transaction 2

balancebalance


Transaction 3: Equipment costing $23,000 is purchased for cash! Transaction 3: Equipment costing $23,000 is purchased for cash!







balancebalance 3000030000 50005000 8000080000 150000150000 440000440000 50005000 5500055000 1000010000 300000300000 460000460000


balancebalance


Transaction 4: A new delivery truck is purchased for $45,000. $10,000 Transaction 4: A new delivery truck is purchased for $45,000. $10,000 is paid in cash, the remainder is borrowed. is paid in cash, the remainder is borrowed.







balancebalance 70007000 50005000 8000080000 150000150000 463,000463,000 50005000 5500055000 1000010000 300000300000 460000460000


balancebalance


Transaction 5: Mary Anne’s sells $26,000 of bicycles in inventory to Transaction 5: Mary Anne’s sells $26,000 of bicycles in inventory to Tron. Corp. Mary Anne invoices Tron for the selling price of $40,000 Tron. Corp. Mary Anne invoices Tron for the selling price of $40,000

(they send Tron the bill). (they send Tron the bill).







balancebalance (3,000)(3,000) 50005000 8000080000 150000150000 508000508000 50005000 5500055000 1000010000 335,000335,000 460000460000


balancebalance


Transaction 6: Tron Corp. Pays Mary Anne’s $45,000 Transaction 6: Tron Corp. Pays Mary Anne’s $45,000







balancebalance (3,000)(3,000) 50005000 120,000120,000 124,000124,000 508000508000 50005000 5500055000 1000010000 335,000335,000 474,000474,000


balancebalance


Transaction 7:Mary Anne (the owner) withdraws $20,000 for personal Transaction 7:Mary Anne (the owner) withdraws $20,000 for personal use. use. this is called this is called drawings or dividendsdrawings or dividends







balancebalance 42,00042,000 50005000 75,00075,000 124,000124,000 508000508000 50005000 5500055000 1000010000 335,000335,000 474,000474,000


balancebalance


Transaction 8: A leak in the warehouse roof is repaired; the cost is Transaction 8: A leak in the warehouse roof is repaired; the cost is $8000 and is paid in cash$8000 and is paid in cash







balancebalance 22,00022,000 50005000 75,00075,000 124,000124,000 508000508000 50005000 5500055000 1000010000 335,000335,000 454,000454,000


balancebalance


Use the final values from the transaction analysis sheet to update Mary Use the final values from the transaction analysis sheet to update Mary Anne’s Balance sheet:Anne’s Balance sheet:

MARY ANNE'S BICYCLES MARY ANNE'S BICYCLES

BALANCE SHEET BALANCE SHEET

DECEMBER 31, 2--- DECEMBER 31, 2---

ASSETSASSETS LIABILITIESLIABILITIES

CashCash Accounts payableAccounts payable

Accounts ReceivableAccounts Receivable Easton Ind.Easton Ind.

GT IndustriesGT Industries Shimano Inc.Shimano Inc.

Tron Corp.Tron Corp. Taxes PayableTaxes Payable

InventoryInventory Mortgage PayableMortgage Payable

LandLand 125,000 125,000 Total LiabilitiesTotal Liabilities

Building & EquipmentBuilding & Equipment

OWNERS' EQUITYOWNERS' EQUITY

Mary Anne CapitalMary Anne Capital

Total Owners' EquityTotal Owners' Equity

Total AssetsTotal Assets Total OE & LTotal OE & L

1transaction analysis, chapt 3 transaction analysis, chapter 3, p. 49-59 practice q: p. 59 & 60...

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