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Beginning Investment in the business: The owner of the company has invested $18,000 cash into the business. This increases the assets of the business
Beginning Investment in the business: The owner of the company has invested $18,000 cash into the business. This increases the assets of the business from its zero balance. Owner's equity also increases from its zero balance. Make sure the equation stays in balance. Borrow cash: The company borrows $9,000 cash from the local bank. This increases the assets from its balance after the first transaction. The company now owes the bank. Thus, liabilities increase from their zero balance. Notice this transaction did not affect owner's equity. The equation still needs to balance. Purchase equipment: The company pays cash for a piece of equipment costing $6,000. Make sure that the equation stays in balance. Remember, the left side of the equation summarizes the total assets. The company has merely exchanged one asset (cash) for another asset (equipment); the value of each asset is the same. Owner's Assets = Liabilities + Equity $0 = $0 + $0 $ $ $ + $ $ $ $ Jones Company: Analyze the accounting equation for another business, Jones Company. Assume that the assets are $66,000 and the liabilities are $26,400. By rearranging the accounting equation, you determine that owner's equity is $ During the year, the owner invested an additional $4,000 in the business. The company also paid off $2,500 of its debt. What would the accounting equation look like at the end of the year for Jones Company? Enter the updated amounts for Jones' accounting equation below.
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