Use the following balance sheet equation format to show the effect of the following transactions. Write the account names that will be used for each transaction
Account name Total assets Total
liabilities Paid-in
capital Retained Earnings
1. The owners invest $42,000 in the company.
2. The company purchases equipment costing $6,000, paying $2,000 with the remainder as a note payable.
3. The company acquires inventory costing $2,500, paying $1,500 with the remainder on account.
4. Depreciation on the equipment was $200.
Item Account name Total assets Total
liabilities Paid-in
capital Retained Earnings
1. Cash +42,000
Paid-in capital +42,000
2. Equipment +6,000
Cash (2,000 )
Note payable +4,000
3. Inventory +2,500
Cash (1,500 )
Accounts Payable +1,000
4. Depreciation expense (200 )
Accumulated
Depreciation-
Equipment (200 )
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