Question: Determining how transactions change an accounting equation Calvin Parish is starting Parish Repair Shop, a small service business. Parish Repair Shop uses the accounts shown in the following accounting equation. Use the form in your Working Papers to complete this problem.
Transactions: 1. Received cash from owner as an investment, $3,000.00.
2. Paid cash for insurance, $1,600.00.
3. Bought supplies on account from Five Star Supply, $700.00.
4. Bought supplies on account from Riverland Company, $300.00.
5. Paid cash on account to Five Star Supply, $700.00.
6. Paid cash on account to Riverland Company, $200.00.
7. Paid cash for supplies, $100.00.
8. Received cash from owner as an investment, $1,500.00.
Instructions: For each transaction, complete the following. Transaction 1 is given as an example.
a. Analyze the transaction to determine which accounts in the accounting equation are affected.
b. Write the amount in the appropriate columns using a plus () if the account increases or a minus () if the account decreases.
c. Calculate the new balance for each account in the accounting equation. d. Before going on to the next transaction, determine that the accounting equation is still in balance.