Question

At the beginning of last month, Harley Franks started a barbershop, Harley’s Cutters. The following events occurred during the month.

Harley invested $30,000 cash in the company.

Harley purchased $15,000 of equipment for cash.

Harley paid $500 cash to rent space for the first month of operations.

Harley purchased $1,200 of equipment on a note payable.

Cash received from haircutting services for the first half of the month was $900.

Harley provided $200 of haircutting services on account.

Harley received and deposited a $100 check for the services previously provided.

Harley paid $200 cash to an assistant for hours worked during the grand opening.

Cash received from services provided during the second half of the month was $1,000.

Harley paid $400 towards the principal on the note payable.

Harley made a $900 cash withdrawal from the company.

Requirements:

Complete the accounting equation worksheet for the transactions.

Total the worksheet and verify that Assets = Liabilities + Equity.

Harley’s Cutters

Accounting Equation Worksheet

            Assets        =     Liab +             Equity     

Cash    Acc Rec    PPE       Note Pay    Capital    Draws    Rev    Exp

_______ _______ _______     _______     _______   _______ _______ _______

_______ _______ _______     _______    _______   _______ _______ _______

_______ _______ _______     _______     _______   _______ _______ _______

_______ _______ _______     _______     _______   _______ _______ _______

_______ _______ _______     _______     _______   _______ _______ _______

_______ _______ _______     _______     _______   _______ _______ _______

_______ _______ _______     _______     _______   _______ _______ _______

_______ _______ _______     _______     _______   _______ _______ _______

_______ _______ _______     _______     _______   _______ _______ _______

_______ _______ _______     _______     _______   _______ _______ _______

_______ _______ _______     _______     _______   _______ _______ _______

_______ _______ _______     _______     _______   _______ _______ _______

* * * Total All Columns to the Total Line * * *

PPE = Property, Plant & Equipment

Answer 1

Each transaction of accounting must fall under the accounting equation as below:

Assets			=	Liabilities	+	Equity
Cash	Rec.	PPE	=	Note	+	Cap	Draw	Rev	Exp
+30000			=		+	+30000
-15000		+15000	=		+
-500			=		+				-500
		+1200	=	+1200	+
+900			=		+			+900
	+200		=		+			+200
+100	-100		=		+
-200			=		+				-200
+1000			=		+			+1000
-400			=	-400	+
-900			=		+		-900
15000	100	16200	=	800	+	30000	-900	2100	-700