Zen began a new consulting firm on January 5. The accounting equation showed the foll
Leora Diamond began a professional practice on June 1 and plans to prepare financial statements at the
end of each month. During June, Diamond (the owner) completed these transactions:
a. Owner invested $70,000 cash along with equipment that had a $20,000 market value in exchange for
common stock.
b. Paid $2,000 cash for rent of office space for the month.
c. Purchased $25,000 of additional equipment on credit (payment due within 30 days).
d. Completed work for a client and immediately collected the $3,000 cash earned.
e. Completed work for a client and sent a bill for $9,500 to be received within 30 days.
f. Purchased additional equipment for $5,000 cash.
g. Paid an assistant $3,500 cash as wages for the month.
h. Collected $6,500 cash as a partial payment for the amount owed by the client in transaction e.
I. Paid $25,000 cash to settle the liability created in transaction c.
j. Paid $1,500 cash dividends to the owner.
Required
Create a table like the one in Exhibit 1.9, using the following headings for columns: Cash; Accounts
Receivable; Equipment; Accounts Payable; Common Stock; Dividends; Revenues; and Expenses. Then
use additions and subtractions to show the effects of the transactions on individual items of the accounting
equation. Show new balances after each transaction.
