Transaction Analysis,
Chapter 3, p. 49-59
Practice Q: p. 59 & 60 ex. #1,2,3
BUSINESS TRANSACTION:
examples:
Transaction Analysis, Chapt 3
1
Simplified balance sheet of Mary Anne’s Bicycles
MARY ANNE'S BICYCLES
BALANCE SHEET
DECEMBER 31, 2--ASSETS
LIABILITIES
Cash
50,000
Accounts payable
Accounts Receivable
Easton Ind.
40,000
GT Industries
20,000
Shimano Inc.
55,000
Tron Corp.
80,000
Taxes Payable
10,000
Inventory
150,000
Mortgage Payable
300,000
Land
125,000
Total Liabilities
405,000
Building & Equipment
440,000
OWNERS' EQUITY
Total Assets
865,000
Mary Anne Capital
200,000
Retained earnings
260,000
Total Owners' Equity
460,000
Total OE & L
865,000
Transaction Analysis, Chapt 3
2
Any financial business transaction
will effect and change the assets,
liabilities and owner’s equity of the
balance sheet… to understand how
transactions effect the assets,
liabilities and owner's equity, lets
change the layout of the balance
sheet into a working paper called the
“accounting equation analysis
sheet
 See the spreadsheet HO
Transaction Analysis, Chapt 3
3
Transaction 1: Mary Anne’s Bicycles pays $35,000 to Easton Ind.
 what accounts will be effected? Will the accounts increase or
decrease?
Complete the transaction analysis table
EQUATION ANALYSIS SHEET
ASSETS
Transaction
Cash
opening balance
50000
Transaction 1
(35,000)
balance
15000
A/R
=
Inventory
GT
Tron
20000
80000
150000
Build. & Equip.
440000
LIABILITIES
A/P
+
O.E.
Taxes
Mortgage
MA
Easton
Shimano
40000
55000
10000
300000
460000
55000
10000
300000
460000
(35,000)
20000
80000
150000
440000
5000
Transaction Analysis, Chapt 3
4
Transaction 2: GT Ind. Pays Mary Anne’s $15,000 of the $20,000 owed
to Mary Annes’ Bicycles.
 what accounts will be effected? Will the accounts increase or
decrease?
Complete the transaction analysis table
EQUATION ANALYSIS SHEET
ASSETS
Transaction
balance
Cash
A/R
A/R
(bank)
GT
Tron
15000
20000
80000
=
Inventory
150000
Build. & Equip.
440000
LIABILITIES
A/P
A/P
+
Taxes
Easton
Shimano
owing
5000
55000
10000
Mortgage
O.E.
Mary
Anne
300000
460000
Transaction 2
balance
Transaction Analysis, Chapt 3
5
Transaction 3: Equipment costing $23,000 is purchased for cash!
 what accounts will be effected? Will the accounts increase or
decrease?
Complete the transaction analysis table
EQUATION ANALYSIS SHEET
ASSETS
Transaction
balance
Cash
A/R
A/R
(bank)
GT
Tron
30000
5000
80000
=
Inventory
150000
Build. & Equip.
440000
LIABILITIES
A/P
A/P
+
Taxes
Easton
Shimano
owing
5000
55000
10000
Mortgage
O.E.
Mary
Anne
300000
460000
Transaction 3
balance
Transaction Analysis, Chapt 3
6
Transaction 4: A new delivery truck is purchased for $45,000. $10,000
is paid in cash, the remainder is borrowed.
 what accounts will be effected? Will the accounts increase or
decrease?
Complete the transaction analysis table
EQUATION ANALYSIS SHEET
ASSETS
Transaction
balance
Cash
A/R
A/R
(bank)
GT
Tron
7000
5000
80000
=
Inventory
150000
Build. & Equip.
463,000
LIABILITIES
A/P
A/P
+
Taxes
Easton
Shimano
owing
5000
55000
10000
Mortgage
O.E.
Mary
Anne
300000
460000
Transaction 4
balance
Transaction Analysis, Chapt 3
7
Transaction 5: Mary Anne’s sells $26,000 of bicycles in inventory to
Tron. Corp. Mary Anne invoices Tron for the selling price of $40,000
(they send Tron the bill).
 what accounts will be effected? Will the accounts increase or
decrease?
Complete the transaction analysis table
EQUATION ANALYSIS SHEET
ASSETS
Transaction
balance
Cash
A/R
A/R
(bank)
GT
Tron
(3,000)
5000
80000
=
Inventory
150000
Build. & Equip.
508000
LIABILITIES
A/P
A/P
+
Taxes
Easton
Shimano
owing
5000
55000
10000
Mortgage
O.E.
Mary
Anne
335,000
460000
Transaction 5
balance
Transaction Analysis, Chapt 3
8
Transaction 6: Tron Corp. Pays Mary Anne’s $45,000
 what accounts will be effected? Will the accounts increase or
decrease?
Complete the transaction analysis table
EQUATION ANALYSIS SHEET
ASSETS
Transaction
balance
Cash
A/R
A/R
(bank)
GT
Tron
(3,000)
5000
120,000
=
Inventory
124,000
Build. & Equip.
508000
LIABILITIES
A/P
A/P
+
Taxes
Easton
Shimano
owing
5000
55000
10000
Mortgage
O.E.
Mary
Anne
335,000
474,000
Transaction 6
balance
Transaction Analysis, Chapt 3
9
Transaction 7:Mary Anne (the owner) withdraws $20,000 for personal
use.  this is called drawings or dividends
 what accounts will be effected? Will the accounts increase or
decrease?
Complete the transaction analysis table
EQUATION ANALYSIS SHEET
ASSETS
Transaction
balance
Cash
A/R
A/R
(bank)
GT
Tron
42,000
5000
75,000
=
Inventory
124,000
Build. & Equip.
508000
LIABILITIES
A/P
A/P
+
Taxes
Easton
Shimano
owing
5000
55000
10000
Mortgage
O.E.
Mary
Anne
335,000
474,000
Transaction 7
balance
Transaction Analysis, Chapt 3
10
Transaction 8: A leak in the warehouse roof is repaired; the cost is
$8000 and is paid in cash
 what accounts will be effected? Will the accounts increase or
decrease?
Complete the transaction analysis table
EQUATION ANALYSIS SHEET
ASSETS
Transaction
balance
Cash
A/R
A/R
(bank)
GT
Tron
22,000
5000
75,000
=
Inventory
124,000
Build. & Equip.
508000
LIABILITIES
A/P
A/P
+
Taxes
Easton
Shimano
owing
5000
55000
10000
Mortgage
O.E.
Mary
Anne
335,000
454,000
Transaction 3
balance
Transaction Analysis, Chapt 3
11
Use the final values from the transaction analysis sheet to update Mary
Anne’s Balance sheet:
MARY ANNE'S BICYCLES
BALANCE SHEET
DECEMBER 31, 2---
ASSETS
LIABILITIES
Cash
Accounts payable
Accounts Receivable
Easton Ind.
GT Industries
Shimano Inc.
Tron Corp.
Taxes Payable
Inventory
Land
Mortgage Payable
125,000
Total Liabilities
Building & Equipment
OWNERS' EQUITY
Mary Anne Capital
Total Owners' Equity
Total Assets
Transaction Analysis,Total
ChaptOE
3 &L
12