A tabular analysis of the transactions made by Roberta Mendez & Co., a decorating consulting firm, for the month of August is shown below. Each increase and decrease in stockholders’ equity is explained.
|
Assets |
= |
Liabilities |
+ |
Stockholders’ Equity |
|||||
|
Cash |
+ |
Office |
= |
Accounts Payable |
+ |
Common Stock |
+ |
Retained |
|
|
1. |
+25,000 |
+25,000 |
Earnings |
||||||
|
2. |
+7,000 |
||||||||
|
3. |
+8,000 |
+8,000 |
|||||||
|
4. |
850 |
850 |
|||||||
Describe each transaction that occurred for the month.
ACTION PLAN
• Analyze the tabular analysis to determine the nature and effect of each transaction.
• Keep the accounting equation always in balance.
• Remember that a change in an asset will require a change in another asset, a liability, or stockholders’ equity.