Question

Option #2: Analyzing the Effect of Transactions Using the Accounting Equation Detroit Roofing Company began operations in August and completed the following transactions during that first month of operations. August 1 Detroit Roofing Company’s stockholders invested $45,000 cash in the company. 2 The company purchased $25,000 in office equipment. It paid $5,000 in cash and signed a note payable promising to pay the $20,000 over the next three years. 2 The company rented office space and paid $3,000 cash for the August rent. 6 The company installed a new roof for a customer and immediately collected $5,000. 7 The company paid a supplier $2,000 for roofing materials used on the August 6 job. 8 The company purchased a $2,500 copy machine for office use on credit. 9 The company completed work for additional customers on credit in the amount of $16,000. 15 The company paid its employees’ salaries of $2,300 for the first half of the month. 17 The company installed a new roof for a customer and immediately collected $2,400. 20 The company received $10,000 in payments from the customers billed on August 9. 28 The company paid $1,500 on the copy machine purchased on August 8. It will pay the remaining balance in June. 31 The company paid its employees’ salaries of $2,400 for the second half of the month. 31 The company paid a supplier $5,300 for roofing materials used on the remaining jobs completed during August. 31 The company paid $450 cash for this month’s utility bill.

Answer 1

Account Equation :

Assets = Liabilities + Equity

Date	Assets				=	Liabilities		+	Equity	Revenue	-	Expenses
	Cash	Accounts Receivable	Office Equipment	Copy Machine		Accounts Payable	Note Payable		Common Stock
August 1	45,000								45,000
August 2	(5,000)		25,000				20,000
August 2	(3,000)											3,000
August 6	5,000									5,000
August 7	(2,000)											2,000
August 8				2,500		2,500
August 9		16,000								16,000
August 15	(2,300)											2,300
August 17	2,400									2,400
August 20	10,000	(10,000)
August 28	(1,500)					(1,500)
August 31	(2,400)											2,400
August 31	(5,300)											5,300
August 31	(450)											450
Balances	40,450	6,000	25,000	2,500		1,000	20,000		45,000	23,400		15,450