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Analyzing the Effect of Business Transactions

Details: Your friend, Don Jones, has provided you with the following information about his new home inspection business, which he is operating as a sole proprietorship. Using the accounting equation, analyze and report Don's business transactions for the months of September, October and November. Since Don is planning to do his own bookkeeping, prepare a presentation for Don in which you explain how each transaction fits into the accounting equation. Use one slide for each transaction. Be sure to type an explanation in the speaker notes for each slide.

1. Sept. 1 Signed up for home inspection course at local community college. Cost is $1,000. Put this on the business credit card.
2. Sept. 20 Transferred $2,500 from personal savings account to business checking account.
3. Sept. 25 Purchased reference materials from local book store. Paid $250 cash.
4. Sept. 25 Signed up for home inspection licensing exam. Placed the $400 fee on the business credit card.
5. Oct. 15 Purchased a 1 year insurance policy for the business by putting the $2,400 premium on the business credit card.
6. Oct. 20 Paid $250 on the business credit card.
7. Oct. 25 Purchased tools for the business by paying $500 cash.
8. Oct. 30 Paid $200 to get business cards printed. (Note: this an advertising expense)
9. Nov. 1 Purchased candy baskets to leave at local realtors' offices to advertise business. Paid $100 cash.
10. Nov. 10 Purchased office supplies needed to prepare inspection reports. Paid $60 cash.
11. Nov 20 Purchased truck costing $10,000 to use for business. Took out auto loan from local bank.

Solution Summary

This solution is comprised of a PowerPoint document which discusses the effect of business transactions on the basic accounting equation.

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