financial accounting:

for the question solved below: write the journal formula for the 10 transactions (date, debit and credit )

Transaction (1). Investment of Cash by Owner. Ray Neal starts a smartphone app development company which he names Softbyte. On September 1, 2020, he invests $15,000 cash in the business. This transaction results in an equal increase in assets and owner's equity. Basic Analysis The asset Cash increases $15,000, and owner's equity (specifically Owner's Capital) increases $15,000. Assets = Liabilities + Equation Analysis Owner's Equity Owner's Capital +$15,000 Cash (1) +$15,000 = Initial investment Observe that the equality of the accounting equation has been maintained. Note that the in- vestments by the owner do not represent revenues, and they are excluded in determining net income. Therefore, it is necessary to make clear that the increase is an investment (increasing Owner's Capital) rather than revenue. Transaction (2). Purchase of Equipment for Cash. Softbyte purchases computer equipment for $7,000 cash. This transaction results in an equal increase and decrease in total assets, though the composition of assets changes. Basic Analysis The asset Cash decreases $7,000, and the asset Equipment increases $7,000. Assets Liabilities + + Equipment Owner's Equity Owner's Capital $15,000 Cash $15,000 -7,000 Equation Analysis (2) +$7,000 $ 8,000 + $7,000 $15,000 $15,000 Observe that total assets are still $15,000. Owner's equity also remains at $15,000, the amount of Ray Neal's original investment. Transaction (3). Purchase of Supplies on Credit. Softbyte purchases headsets (and other computer accessories expected to last several months) for $1,600 from Mobile Solu- tions. Mobile Solutions agrees to allow Softbyte to pay this bill in October. This transaction is a purchase on account (a credit purchase). Assets increase because of the expected future benefits of using the headsets and computer accessories, and liabilities increase by the amount due to Mobile Solutions. The two sides of the equation still balance at $17,800. Owner's equity decreases when Soft- byte incurs the expense. Expenses are not always paid in cash at the time they are incurred. When Softbyte pays at a later date, the liability Accounts Payable will decrease, and the asset Cash will decrease (see Transaction (8)]. The cost of advertising is an expense (rather than an asset) because the company has used the benefits. Advertising Expense is included in deter- mining net income. Transaction (6). Services Performed for Cash and Credit. Softbyte performs $3,500 of app development services for customers. The company receives cash of $1,500 from customers, and it bills the balance of $2,000 on account. This transaction results in an equal increase in assets and owner's equity. Basic Analysis Three specific items are affected: The asset Cash increases $1,500, the asset Accounts Receivable increases $2,000, and owner's equity increases $3,500 due to Service Revenue. Equation Analysis Assets = Liabilities + Owner's Equity Accounts Accounts Owner's Cash + Receivable + Supplies + Equipment = Payable + Capital + Revenues Expenses $9,200 $1,600 $7,000 $1,850 $15,000 $1,200 $250 Service (6) +1,500 +$2,000 +3,500 Revenue $10,700 + $ 2,000 + $1,600 + $7,000 = $1,850 + $15,000 + $4,700 $250 $21,300 $21,300 Softbyte recognizes $3,500 in revenue when it performs the service. In exchange for this service, it received $1,500 in Cash and Accounts Receivable of $2,000. This Accounts Receivable represents customers' promises to pay $2,000 to Softbyte in the future. When it later receives collections on account, Softbyte will increase Cash and will decrease Accounts Receivable (see Transaction (9)]. Transaction (7). Payment of Expenses. Softbyte pays the following expenses in cash for September: office rent $600, salaries and wages of employees $900, and utilities $200. These payments result in an equal decrease in assets and owner's equity. Basic Analysis The asset Cash decreases $1,700, and owner's equity decreases $1,700 due to the specific expense categories (Rent Expense, Salaries and Wages Expense, and Utilities Expense). Equation Analysis Assets = Liabilities + Owner's Equity Accounts Accounts Owner's Cash + Receivable + Supplies + Equipment = Payable + Capital + Revenues Expenses $10,700 $2,000 $1,600 $7,000 $1,850 $15,000 $4,700 $ 250 (7) -1,700 -600 Rent Expense -900 Sal. and Wages Exp. -200 Utilities Exp. $9.000 + $2,000 $1,600 + $7,000 $1,850 + $15,000 + $4,700 $1,950 $19,600 $19,600 The two sides of the equation now balance at $19,600. Three lines in the analysis indicate the different types of expenses that have been incurred. Transaction (8). Payment of Accounts Payable. Softbyte pays its $250 Daily News bill in cash. The company previously [in Transaction (5)) recorded the bill as an increase in Accounts Payable and a decrease in owner's equity. Basic Analysis This cash payment on account" decreases the asset Cash by $250 and also decreases the liability Accounts Payable by $250. + Owner's Equity Assets Accounts + Receivable + Supplies + $2,000 $1,600 Liabilities Accounts Payable $1,850 Cash + Owner's Capital $15,000 + Equipment $7,000 Revenues $4,700 Expenses $1,950 Equation Analysis $9,000 -250 (8) -250 $8,750 + $2,000 + $1,600 $7,000 $1,600 + $15,000 + $4,700 $1,950 $19,350 $19,350 Observe that the payment of a liability related to an expense that has previously been recorded does not affect owner's equity. The company recorded this expense in Transaction (5) and should not record it again. Transaction (9). Receipt of Cash on Account. Softbyte receives $600 in cash from customers who had been billed for services [in Transaction (6)]. Transaction (9) does not change total assets, but it changes the composition of those assets. Basic Analysis The asset Cash increases $600, and the asset Accounts Receivable decreases $600. + Owner's Equity Liabilities Accounts Payable $1,600 + Assets Accounts Receivable + Supplies + Equipment $2,000 $1,600 $7,000 -600 + Owner's Capital $15,000 + Cash $8,750 +600 Revenues Expenses $1,950 Equation Analysis $4,700 (9) $9,350 + $1,400 + $1,600 + $7,000 $1,600 + $15,000 + $4,700 $1,950 $19,350 $19,350 Note that the collection of an account receivable for services previously billed and recorded does not affect owner's equity. Softbyte already recorded this revenue in Transaction (6) and should not record it again. Transaction (10). Withdrawal of Cash by Owner. Ray Neal withdraws $1,300 in cash from the business for his personal use. This transaction results in an equal decrease in assets and owner's equity. Basic Analysis The asset Cash decreases $1,300, and owner's equity decreases $1,300 due to owner's withdrawal (Owner's Drawings). Assets Liabilities Accounts Accounts Cash + Receivable + Supplies + Equipment = Payable $9.350 $1,400 $1,600 $7,000 $1,600 -1,300 Owner's Equity Owner's Owner's + Capital - Drawings + Revenues $15.000 $4,700 -$1,300 Expenses $1.950 Equation Analysis (10) Drawings $8,050 + $1,400 + $1,600 + $7,000 $1,600 + $15.000 - $1,300 + $4,700 - $1,950 S18.050 $18,050