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Financial Accounting: Jenny's Transactions

Jenny started a catering business and had various financial transactions in June 2020. She purchased $9,000 of equipment with $3,000 cash and a $6,000 accounts payable. She paid $1,500 in wages and $500 for advertising. Jenny obtained a $20,000 bank loan and invested $5,000 of her own money. She billed $2,000 for services and received $500 in cash, with $1,500 expected in July.

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19 views1 page

Financial Accounting: Jenny's Transactions

Jenny started a catering business and had various financial transactions in June 2020. She purchased $9,000 of equipment with $3,000 cash and a $6,000 accounts payable. She paid $1,500 in wages and $500 for advertising. Jenny obtained a $20,000 bank loan and invested $5,000 of her own money. She billed $2,000 for services and received $500 in cash, with $1,500 expected in July.

Uploaded by

kiet
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Topic 1: Introduction to Financial Accounting

Jenny set up her catering business on 1 June 2020. For the month of June 2020, the following
transactions occurred:
(1) Jenny purchased equipment for $9,000. She paid $3,000 cash and agreed to pay the
balance in 90 days.
(2) She paid wages of $1,500.
(3) She paid $500 for an advertisement in the local newspaper.
(4) She obtained a bank loan for $20,000 to finance the expansion of her business.
(5) She put $5,000 of her own money into the business.
(6) Jenny sent bills for $2,000 to customers for services provided in June. She had
received $500 by 30 June, and expected the other $1,500 in July.
Required: Record the transactions as they would affect the accounting equation.

Solution
Assets = Liabilities + Owners’ Equity
A = L + OE
(1) Equipment 9,000 Accounts Payable 6,000
Cash 3,000
(2) Cash 1,500 Wages 1,500
(3) Cash 500 Advertising expense 500
(4) Cash 20,000 Loan 20,000
(5) Cash 5,000 Capital 5,000
(6) Accounts Receivable 2,000 Sales 2,000
Accounts Receivable 500
Cash 500

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