Day 3

After completing Lessons 1-2 and 1-3, you will be able to:

  • Define accounting terms related to starting a service business organized as a proprietorship and to changes that affect the accounting equation.
  • Identify accounting concepts and practices related to starting a service business organized as a proprietorship and to changes that affect the accounting equation.
  • ‘Analyze how transactions affect accounts in an accounting equation. 

Notes 1-2

  1. Obtain a Notes 1-2 handout from your instructor and record your notes through the presentation.  You can also view the presentation here.

Working Together 1-2

  1. Make a copy of this spreadsheet.
  2. Place this file in your Chapter 1 folder.
  3. Rename the file to Lesson 1-2-(Your Initials)
  4. Complete the spreadsheet according to the directions below.

Type in the answers to the following problem in the Working Papers.  Your instructor will guide you through the following example.

  1. For each transaction, place a plus (P) in the appropriate column if the classification is increased.  Place a minus (M) in the appropriate column if the classification is decreased.
  2. Transactions:
    • Bought supplies on account.
    • Received cash from owner as an investment.
    • Paid cash for insurance.
    • Paid cash on account.

On Your Own 1-2

  1. Using your Lesson 1-2 spreadsheet, click on the On Your Own 1-2 sheet at the bottom left, and complete the problem as directed below.

Type in the answers to the following problem in the Working Papers.  Work this problem independently.

  1. For each transaction, place a plus (P) in the appropriate column if the classification is increased.  Place a minus (M) in the appropriate column if the classification is decreased.
  2. Transactions:
    • Received cash from owner as an investment.
    • Bought supplies on account.
    • Paid cash for supplies.
    • Paid cash for insurance.
    • Paid cash on account.

Self-Assessment 1-2

  1. Complete this self-assessment for Lesson 1-2.  You can use your textbook and notes to complete this assessment.  

Lesson 1-2 Assignment

  1. Using your Lesson 1-2 spreadsheet, click on the Application Problem 1-2 sheet at the bottom left, and complete the problem as directed on page 19-20 in your textbook.
  2. Calvin Parish is starting Parish Repair Shop, a small service business.  Parish Repair Shop uses the accounts shown in the following accounting equation.  Use the form in your Working Papers to complete the problem.
  3. Transactions:
    1. Received cash from owner as an investment, $3,000.00.
    2. Paid cash for insurance, $1,600.00.
    3. Bought supplies on account from Five Star Supply, $700.00.
    4. Bought supplies on account from Riverland Company, $300.00.
    5. Paid cash on account to Five Star Supply, $700.00.
    6. Paid cash on account to Riverland Company, $200.00.
    7. Paid cash for supplies, $100.00.
    8. Received cash from owner as an investment, $1,500.00.
  4. Instructions:
    1. For each transaction, complete the following.  Transaction 1 is given as an example:
      1. Analyze the transaction to determine which accounts in the accounting equation are affected.
      2. Write the amount in the appropriate columns using a the number as a increase and a (-) and the number to show a decrease.
      3. Calculate the new balance for each account in the accounting equation.
      4. Before going on to the next transaction, determine that the accounting equation is still in balance.

Notes 1-3

  1. Obtain a Notes 1-3 handout from your instructor and record your notes through the presentation.  You can also view the presentation here.

Working Together 1-3

  1. Make a copy of this spreadsheet.
  2. Place this file in your Chapter 1 folder.
  3. Rename the file to Lesson 1-3-(Your Initials)
  4. Complete the spreadsheet according to the directions below.

Type in the answers to the following problem in the Working Papers.  Your instructor will guide you through the following example.

  1. For each transaction, place a plus (P) in the appropriate column if the classification is increased.  Place a minus (M) in the appropriate column if the classification is decreased.  If your transaction affects the Owner’s Equity, place one of the following labels in parenthesis after your P or M:  (revenue), (expense), (withdrawal).
  2. Transactions:
    • Received cash from sales.
    • Sold services on account to Bowman Company.
    • Paid cash for telephone bill.
    • Received cash on account from Bowman Company.
    • Paid cash to owner for personal use.

On Your Own 1-3

  1. Using your Lesson 1-3 spreadsheet, click on the On Your Own 1-3 sheet at the bottom left, and complete the problem as directed below.

Type in the answers to the following problem in the Working Papers.  Work this problem independently.

  1. For each transaction, place a plus (P) in the appropriate column if the classification is increased.  Place a minus (M) in the appropriate column if the classification is decreased.
  2. Transactions:
    • Sold services on account to Navarro Company.
    • Received cash from sales.
    • Received cash on account from Navarro Company.
    • Paid cash to owner for personal use.
    • Paid cash for rent.

Self-Assessment 1-3

  1. Complete this self-assessment for Lesson 1-3.  You can use your textbook and notes to complete this assessment.  

Lesson 1-3 Assignment

  1. Using your Lesson 1-3 spreadsheet, click on the Application Problem 1-3 sheet at the bottom left, and complete the problem as directed on page 20-21 in your textbook.
  2. Pete Smith operates a service business called Peter’s Service Company.  Peter’s Service Company uses the accounts shown in the following accounting equation.  Use the form in your Working Papers to complete this problem. 
  3. Transactions:
    1. Paid cash for rent, $300.00.
    2. Paid cash to owner for personal use, $150.00.
    3. Received cash from sales, $800.00.
    4. Paid cash for equipment repairs, $100.00.
    5. Sold services on account to Lisa Lee, $400.00.
    6. Received cash from sale, $650.00.
    7. Paid cash for charitable contributions, $35.00.
    8. Received cash on account from Lisa Lee, $300.00.
  4. Instructions:
    1. For each transaction, complete the following.  Transaction 1 is given as an example:
      1. Analyze the transaction to determine which accounts in the accounting equation are affected.
      2. Write the amount in the appropriate columns using a the number as a increase and a (-) and the number to show a decrease.
      3. Calculate the new balance for each account in the accounting equation.
      4. Before going on to the next transaction, determin that the accounting equation is still in balance.