In the table below, analyze the impact of the transactions on the Accounting Equation. Instructions: Consider the effect of each of the below transactions on the Accounting Equation. Under the appropriate category, list the amount of increase or decrease of each transactions and to which account it will be recorded. The first transaction is shown for you as an example. "sales revenue." Revenue is a component of Net Income, which becomes a component of Retained Earnings. (Net Income equals Revenue minus Expenses.) Therefore, revenue affects Owner Equity. ^^^Receiving payment from a customer in advance for a service not yet performed is called "deferred revenue. Even though the term revenue appears in the account title for deferred revenue, this is NOT a revenue account. Deferred indicates that the company has yet to provide services even though it has collected the customer's cash. The company owes the customer a service, which creates a liability. Assets = Liabilities + Owner Equity 1 Sell shares of common stock for Cash increase $25,000 Common Stock increase $25,000 Part 2: Now that you've analyzed the effect of each of the transactions on the Accounting Equation, show the journal entry for each of the 10 transactions. $25,000 2 Borrow $10,000 from bank (bank loan) Cash increase $10,000 Bank loan increase $10,000 3 Purchase equipment Debit Credit for $24,000 cash. #1 Pay one year of rent 4 in advance, $6,000 ($500 per month).^ Purchase supplies on Equipment increases $24,000 Cash decrease $24,000 Prepaid Rent increases $24,000 Cash decrease $24,000 Supplies increase $2,300 #2 #3 5 Account Payable account, $2,300. increase $2,300 6 Provide cricket Cash increase training to customers $4,300 Service Revenue increases $4,300 #4 for cash, $4,300.^^ 7 Provide cricket Account training to customers Receivable Service Revenue increases $2,000 #5 on account, $2,000. increases $2,000 8 Receive cash in Cash increase Customer Advances advance for training sessions to be given in $600 increase $600 #6 the future, $600.^^^ 9 Pay salaries to employees, $2,800. 10 Pay cash dividends of $200 to shareholders. Cash decrease $2,800 Cash decrease $200 Expenses increase ($2,800) #7 Retained Earnings decrease $200