Question

Meg McIntyre opened a public relations firm called Pop Chart on August 1, 2018. The following amounts summarize her business on August 31, 2018During September 2018, the business completed the following transactions: a. Received contribution of \(14,000 cash from Meg McIntyre in exchange for common stock. b. Performed service for a client and received cash of \)1,600. c. Paid off the beginning balance of accounts payable. d. Purchased office supplies from OfficeMax on account, \(1,200. e. Collected cash from a customer on account, \)2,300. f. Cash dividends of \(1,500 were paid to stockholders. g. Consulted for a new band and billed the client for services rendered, \)4,000. h. Recorded the following business expenses for the month: Paid office rent: \(900. Paid advertising: \)450. Analyze the effects of the transactions on the accounting equation of Pop Chart using the format presented above.:

Short answer

Effect of the transaction on the accounting equation is shown as follows:

	Assets	=	Liabilities	+	Equity
Contributed Capital	+	Retained Earnings
Cash	+	Accounts Receivable	+	Office Supplies	+	Land	Accounts Payable	Common Stock	-	Dividends	+	Service Revenue	-	Rent Expense	-	Advertising Expense
Bal.	$2,600	+	$2,500	+	$0	+	$16,000	=	$5,000	+	$13,600			+	$2,500
a	+14,000										+14,000
Bal.	$16,600	+	$2,500	+	$0	+	$16,000	=	$5,000	+	$27,600			+	$2,500
b	+1,600														+,1600
Bal.	$18,200	+	$2,500	+	$0	+	$16,000	=	$5,000	+	$27,600			+	$4,100
c	-5000								-5000
Bal.	$13,200	+	$2,500	+	$0	+	$16,000	=	$0	+	$27,600			+	$4,100
d					+1,200				+1,200
Bal.	$13,200	+	$2,500	+	$1,200	+	$16,000	=	$1,200	+	$27,600			+	$4,100
e	+2,300		-2,300
Bal.	$15,500	+	$200	+	$1,200	+	$16,000	=	$1,200	+	$27,600			+	$4,100
f	-1,500												-1,500
Bal.	$14,000	+	$200	+	$1,200	+	$16,000	=	$1,200	+	$27,600	-	$1,500	+	$4,100
g			+4,000												+4,000
Bal.	$14,000	+	$4,200	+	$1,200	+	$16,000	=	$1,200	+	$27,600	-	$1,500	+	$8,100
h	-1350																-900		-450
Bal.	$12,650	+	$4,200	+	$1,200	+	$16,000	=	$1,200	+	$27,600	-	$1,500	+	$8,100	-	$900	-	$450
	$34,050		$34,050

Step-by-step solution

Explanation on Transaction Analysis

Transaction analysis analyzes the transaction and indicates the accounts involved in the transaction.

Explanation on Accounting Equation

As per the accounting equation, the total of assets of a company should be equal to the total of liabilities and stockholders’ equity of the company. As per the above accounting equation, the left side of the equation is $34,050, which is also equal to the right side of equation.