Setting up Basic Accounting Practices
Assuming the role of an accountant, your new client Suzie Maye needs help in setting up basic accounting practices for her business. You begin by showing her how to set up a transaction analysis based on the accounting equation of Assets = Liabilities + Owner’s Assets. You show Suzie how to enter the various assets, liabilities and owner’s assets into the transaction analysis template demonstrating the balance based on the equation. This will help Suzie understand that through this process every financial transaction that occurs in her business must be reconciled on each side of the equation. Please record the following transactions using transaction analysis. Please use this template to complete this assignment. 1-May Owner, Suzie Maye, invested $7,000 in her business, Matrix Consulting. 2-May Company paid monthly rent, $900. 3-May Company bought supplies on account, $600. 5-May Company paid monthly advertising, $125. 9-May Company performed services, $4,000. 12-May Owner, Suzie Maye, withdrew $1,000 for personal use. 15-May Company performed services on account for $5,400. 17-May Company paid monthly salaries, $2,500. 20-May Company made a payment on account, $600. 23-May Company received $4,000 from a customer on account. 26-May Company borrowed $5,000 from local bank. 29-May Company bought equipment on account for $4,200. 30-May Company paid monthly utilities, $275.
| Date | Transaction | Assets | Liabilities | Owner’s Equity |
|---|---|---|---|---|
| May 1 | Owner invested $7,000 in her business | $7,000 | $7,000 | |
| May 2 | Paid monthly rent | $6,100 | $900 | $7,000 |
| May 3 | Bought supplies on account | $6,100 | $600 | $7,000 |
| May 5 | Paid monthly advertising | $5,975 | $600 | $7,000 |
| May 9 | Performed services | $9,975 | $600 | $7,000 |
| May 12 | Owner withdrew $1,000 for personal use | $8,975 | $600 | $6,000 |
| May 15 | Performed services on account | $14,375 | $600 | $6,000 |
| May 17 | Paid monthly salaries | $11,875 | $600 | $6,000 |
| May 20 | Made a payment on account | $11,275 | $6,000 | |
| May 23 | Received $4,000 from a customer on account | $15,275 | $6,000 | |
| May 26 | Borrowed $5,000 from local bank | $20,275 | $5,000 | $6,000 |
| May 29 | Bought equipment on account | $20,275 | $9,200 | $6,000 |
| May 30 | Paid monthly utilities | $19,975 | $9,200 | $6,000 |
The above table shows the transactions for the month of May using transaction analysis based on the accounting equation of Assets = Liabilities + Owner’s Equity. Each transaction is recorded on the appropriate side of the equation to ensure that the equation remains in balance.
