Certainly! Let's break down each transaction step by step and see how they affect the cash and owner's equity in the balance sheet.
Initial amounts:
- Cash: \[tex]$2500
- Owner's Equity: \$[/tex]2500
Transaction a: You purchase testing equipment for \[tex]$815.
- Decrease in Cash: \$[/tex]2500 - \[tex]$815 = \$[/tex]1685
- The purchase of equipment does not affect Owner's Equity directly.
Balance after transaction a:
- Cash: \[tex]$1685
- Owner's Equity: \$[/tex]2500
Transaction b: You sell a product purchased for \[tex]$500 for \$[/tex]1750.
- Increase in Cash by selling price: \[tex]$1685 + \$[/tex]1750 = \[tex]$3435
- Increase in Owner's Equity by the profit made (selling price - cost): \$[/tex]2500 + (\[tex]$1750 - \$[/tex]500) = \[tex]$2500 + \$[/tex]1250 = \[tex]$3750
Balance after transaction b:
- Cash: \$[/tex]3435
- Owner's Equity: \[tex]$3750
Transaction c: You receive next month's utility bill for \$[/tex]185.
- This does not affect Cash immediately, as the bill is not yet paid.
- Decrease in Owner's Equity by the bill amount: \[tex]$3750 - \$[/tex]185 = \[tex]$3565
Balance after transaction c:
- Cash: \$[/tex]3435
- Owner's Equity: \[tex]$3565
Transaction d: You pay the rent by check for \$[/tex]300.
- Decrease in Cash: \[tex]$3435 - \$[/tex]300 = \[tex]$3135
- Paying the rent does not further affect Owner's Equity after it was recorded as an obligation.
Final balance sheet:
- Cash: \$[/tex]3135
- Owner's Equity: \[tex]$3565
So, the missing amounts in the balance sheet after carrying out the transactions would be:
- Cash: \$[/tex]3135
- Owner's Equity: \$3565
