Transaction analysis (Learning Objective 5) 15–20 min.

Rabie Sadek decides to open a cleaning and laundry service titled Rabie Sadek, Inc. in Jnah Beirut. During January, the first month of operations, the following transactions occurred:

1. Rabie Sadek invests $30,000 cash in the business in exchange for the company’s common stock.

2. Purchased computer equipment for $6,000, paying $2,000 in cash and the remainder due in 30 days.

3. Purchased office supplies for $1,300 cash.

4. Received a bill for $300 for advertising in the newspaper.

5. Cash receipts from customers for cleaning and laundry amounted to $2,800.

6. Paid salaries of $600 to workers.

7. Billed customers $350 for cleaning and laundry services.

8. Paid $300 for advertising that was previously billed in Transaction 4.

9. Incurred utilities expense for month on account, $600.

Requirement Analyze the effects of these transactions on the basic accounting equation. Use headings for Cash, Accounts Receivable, Office Supplies, Computer Equipment, Accounts Payable, Common Stock, Service Revenue, Advertising Expense, Salaries Expense, and Utilities Expense.

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