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Hello students, here is a question.
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During a month, a company enters into the following transaction.
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Borrow $3 ,200 cash from the bank signing a form agreement.
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Price $4 ,000 and new equipment on cash.
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Pay off $2 ,400 of accounts payable.
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Pays off $1 ,200 on notes paid.
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There are two questions to solve.
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The first is show the effect of these transactions on the basis of accounting equation.
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And our second sub -question is prepare the journal entry that would be used to record the transaction.
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So, let us start solving the problem.
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So, first we will solve the first sub -question that is to show the effect of transaction on the bank accounting equation.
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So, the a questions will be the format assets, amount, liabilities, amount.
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So, the first entry will be first transaction is cash that is $3 ,200, equipment $4 ,000, cash, again cash it is $2 ,400 that is a negative and another cash will be $1 ,200 that is also the negative one.
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So, next we will see what are the liabilities, non -payable long term that is $3 ,200, account payable $4 ,000 and account payable one more that is a negative $2 ,400 and note payable is $1 ,200...