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Accounting 205 Phase 3 IP

This document outlines critical accounting transactions for a home inspection business. It includes initial expenses for courses and licensing, transfers from personal accounts, and various purchases necessary for business operations. Each transaction is detailed with its impact on assets, liabilities, and owner’s equity, providing a clear understanding of the accounting equation. By analyzing these transactions, one can gain insights into managing business finances effectively while maintaining compliance with accounting principles.

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Accounting 205 Phase 3 IP

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  1. Accounting 205Phase 3 IP

  2. Accounting Equation Assets = Owner’s Equity +Outsider’s Liabilities

  3. First Transaction 1. Sept. 1 Signed up for home inspection course at local community college. Cost is $1,000. Put this on the business credit card. Equation: Liability -$1000 (Credit card payable) Owner’s Equity:-$1000 (Expense)

  4. Second Transaction 2. Sept. 20 Transferred $2,500 from personal savings account to business checking account. Equation: Assets: +$2500 (Cash) Owner’s Equity: +$2500

  5. Third Transaction 3. Sept. 25 Purchased reference materials from local book store. Paid $250 cash. Equation: Assets: -$250 (Cash) Assets:+$250 (Books)

  6. Fourth Transaction 4. Sept. 25 Signed up for home inspection licensing exam. Placed the $400 fee on the business credit card. Equation: Liability : $400 (Credit card payable) Owner’s Equity:-$400 (Expenses)

  7. Fifth Transaction 5. Oct. 15 Purchased a 1 year insurance policy for the business by putting the $2,400 premium on the business credit card. Equation: Assets: -$2400 (Credit Card Payable) Assets:+$2400 (Prepaid Insurance)

  8. Sixth Transaction 6. Oct. 20 Paid $250 on the business credit card. Equation: Assets: -$250 (Cash) Owner’s Equity:-$250 (Credit card payable)

  9. Seventh Transaction 7. Oct. 25 Purchased tools for the business by paying $500 cash. Equation: Assets: -$500 (Cash) Owner’s Equity:-$500 (Expenses)

  10. Eighth Transaction 8. Oct. 30 Paid $200 to get business cards printed. (Note: this an advertising expense) Equation: Assets: -$200 (Cash) Owner’s Equity:-$200 (Expenses)

  11. Ninth Transaction 9. Nov. 1 Purchased candy baskets to leave at local realtors' offices to advertise business. Paid $100 cash. Equation: Assets: -$100 (Cash) Owner’s Equity:-$100 (Expenses)

  12. Tenth Transaction 10. Nov. 10 Purchased office supplies needed to prepare inspection reports. Paid $60 cash. Equation: Assets: -$60 (Cash) Owner’s Equity:-$60 (Expenses)

  13. Eleventh Transaction 11. Nov 20 Purchased truck costing $10,000 to use for business. Took out auto loan from local bank. Equation: Assets:+$10000 (Truck) Liabilities: +$10000 (Loan)

  14. References Wild,Larson & Chiappetta, (2007). Fundamental accounting principles 18th edition. Boston, MA: McGraw Hill Publishing.

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