Exercise 3-5A Transaction Analysis Linda Kipp started a business on May 1, 20--.

Question

Exercise 3-5A
Transaction Analysis

Linda Kipp started a business on May 1, 20--. Analyze the following transactions for the first month of business using T accounts. Label each T account with the title of the account affected and then place the transaction letter and the dollar amount on the debit or credit side.

Invested cash in the business, $5,000.

Bought equipment for cash, $700.

Bought equipment on account, $600.

Paid cash on account for equipment purchased in transaction (c), $400.

Withdrew cash for personal use, $900.

Cash - Select your answer -a.b.c.d.e.Item 1 - Select your answer -a.b.c.Item 3 - Select your answer -a.c.d.Item 5 - Select your answer -a.c.e.Item 7

Explanation / Answer

Cash A/c a To Capital 5000 b By equipment 700 d By Account payable              400 e By Linda drwaing 900      5,000           2,000 Equipment b To Cash 700 c To Accounts Payable 600      1,300                 -   Accounts Payable d To Cash 400 b By equipment 600         400              600 Linda Kipp capital a By cash 5000           -             5,000 Linda Kipp Drawing e To Cash 900         900                 -

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