Analysis of Transactions The accounting equation provides a convenient mechanism for showing the impact of various transactions and activities on the amounts reported as assets, liabilities, and owners’ equity in the balance sheet. Ann and Greg Fenway run a small art gallery and custom framing business. How will the following transactions affect the amounts reported as assets, liabilities, and Owners’ equity in the balance sheet for their business?

. The Fenways purchase 5 pictures for cash.

. Framing materials are purchased on credit.

. A loan from the bank is repaid (ignore interest).

. A picture is sold for cash at an 80 percent profit.

. A plaster statue falls from a shelf and is broken and discarded.

f. A receivable is collected on a major framing project completed last month for a local law office.

g. Payment is made for the framing materials previously purchased.

h. A cash withdrawal is made by Ann and Greg to meet living costs.

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