Question

Conner Thomas started a new business, Thomas Gymnastics, and completed the following transactions during December: Dec. 1 Received \(19,000 cash from Conner in exchange for common stock. 2 Received \)3,800 cash from customers for services performed. 5 Paid \(200 cash for office supplies. 9 Performed services for a customer and billed the customer for services rendered, \)4,500. 10 Received \(200 invoice for utilities due in two weeks. 15 Paid for advertising in the local paper, \)250. 20 Paid utility invoice received on December 10. 25 Collected cash in full from customer billed on December 9. 28 Paid rent for the month, \(1,600. 28 Paid \)1,450 to assistant for wages. 30 Received \(1,400 cash from customers for services performed. 31 Cash dividends of \)3,500 were paid to stockholders. Analyze the effects of the transactions on the accounting equation of Thomas Gymnastics using a format similar to Exhibit 1-6.

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	Accounts Payable	Common Stock	-	Dividends	+	Service Revenue	-	Rent Expense	-	Salaries Expense	-	Utilities Expense	-	Advertising Expense
Dec 1	+19,000								+19,000
Bal.	$19,000							+	$19,000
Dec 2	+3,800												+3,800
Bal.	$22,800							+	$19,000			+	$3,800
Dec 5	-200				+200
Bal.	$22,600			+	$200	=		+	$19,000			+	$3,800
Dec 9			+4,500										+4,500
Bal.	$22,600	+	$4,500	+	$200	=		+	$19,000			+	$8,300
Dec 10							+200												-200
Bal.	$22,600	+	$4,500	+	$200	=	$200	+	$19,000			+	$8,300					-	$200
Dec 15	-250																				-250
Bal.	$22,350	+	$4,500	+	$200	=	$200	+	$19,000			+	$8,300					-	$200	-	$250
Dec 20	-200						-200
Bal.	$22,150	+	$4,500	+	$200	=	$0	+	$19,000			+	$8,300					-	$200	-	$250
Dec 25.	+4500		-4,500
Bal.	$26,650	+	$0	+	$200	=	$0	+	$19,000			+	$8,300					-	$200	-	$250
Dec 28	-1600														-1600
Dec 28	-1450																-1450
Bal	$23,600	+	$0	+	$200	=	$0	+	$19,000			+	$8,300	-	$1,600	-	$1,450	-	$200	-	$250
Dec30	+1,400												+1,400
Bal	$25,000	+	$0	+	$200	=	$0	+	$19,000			+	$9,700	-	$1,600	-	$1,450	-	$200	-	$250
Dec 31	-3500										-3500
Bal.	$21,500	+	$0	+	$200	=	$0	+	$19,000	-	$3,500	+	$9,700	-	$1,600	-	$1,450	-	$200	-	$250
	$21,700		$21,700

Step-by-step solution

Explanation on Transaction Analysis

Trasaction analysis helps in analyzing the effect of the transaction on the accounting equation.

Explanation on Accounting Equation

As per the accounting equation,both side of the accounting equation should be equal. .