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
- 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
- Make a copy of this spreadsheet.
- Place this file in your Chapter 1 folder.
- Rename the file to Lesson 1-2-(Your Initials)
- 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.
- 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.
- 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
- 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.
- 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.
- 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
- Complete this self-assessment for Lesson 1-2. You can use your textbook and notes to complete this assessment.
Lesson 1-2 Assignment
- 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.
- 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.
- Transactions:
- Received cash from owner as an investment, $3,000.00.
- Paid cash for insurance, $1,600.00.
- Bought supplies on account from Five Star Supply, $700.00.
- Bought supplies on account from Riverland Company, $300.00.
- Paid cash on account to Five Star Supply, $700.00.
- Paid cash on account to Riverland Company, $200.00.
- Paid cash for supplies, $100.00.
- Received cash from owner as an investment, $1,500.00.
- Instructions:
- For each transaction, complete the following. Transaction 1 is given as an example:
- Analyze the transaction to determine which accounts in the accounting equation are affected.
- Write the amount in the appropriate columns using a the number as a increase and a (-) and the number to show a decrease.
- Calculate the new balance for each account in the accounting equation.
- Before going on to the next transaction, determine that the accounting equation is still in balance.
- For each transaction, complete the following. Transaction 1 is given as an example:
Notes 1-3
- 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
- Make a copy of this spreadsheet.
- Place this file in your Chapter 1 folder.
- Rename the file to Lesson 1-3-(Your Initials)
- 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.
- 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).
- 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
- 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.
- 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.
- 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
- Complete this self-assessment for Lesson 1-3. You can use your textbook and notes to complete this assessment.
Lesson 1-3 Assignment
- 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.
- 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.
- Transactions:
- Paid cash for rent, $300.00.
- Paid cash to owner for personal use, $150.00.
- Received cash from sales, $800.00.
- Paid cash for equipment repairs, $100.00.
- Sold services on account to Lisa Lee, $400.00.
- Received cash from sale, $650.00.
- Paid cash for charitable contributions, $35.00.
- Received cash on account from Lisa Lee, $300.00.
- Instructions:
- For each transaction, complete the following. Transaction 1 is given as an example:
- Analyze the transaction to determine which accounts in the accounting equation are affected.
- Write the amount in the appropriate columns using a the number as a increase and a (-) and the number to show a decrease.
- Calculate the new balance for each account in the accounting equation.
- Before going on to the next transaction, determin that the accounting equation is still in balance.
- For each transaction, complete the following. Transaction 1 is given as an example: