LESSON

ONE:INTRODUCTION

TO

ACCOUNTINGAims:1.

Use

accounting

vocabulary.2.

Explain

what

accounting

is.·

3.

Describe

the

financial

accounting

and

managerialaccounting.4.

Use

the

accounting

equation

to

describe

anorganization’s

financial

position.5.

Prepare

and

use

the

financial

statements.6.

Use

the

accounting

equation

to

analyze

businesstransactions.7.

Explain

what

the

accounting

elements

are.BAIDUWith

Internet

space

booming,

Baidu

becomes

a

big

and

famouscompany.

As

we

know,

baidu

offers

search

and

other

services.Thanks

to

baidu,

users

can

get

relevant

information

online

mucheasier

through

links

provided

on

our

website,

apps,

etc.

Internet-based

companies

like

baidu

operate

in

highly

competitive

marketsand

face

a

lot

of

uncertainties.

Every

year

many

new

Internet-based

companies

were

founded

and

some

Internet-basedcompanies

went

bankrupt

in

the

meantime.If

you

were

an

investor

who

wanted

to

invest

in

an

internet-basedcompany,

how

would

you

know

whether

baidu

or

any

othercompany

is

a

good

choice?

What

information

would

you

need

tohelp

you

make

a

decision?You

can

get

accounting

information

from

a

company’s

financialstatements.

The

financial

statements

help

investors,

creditors,

andother

interested

parties

better

understand

a

company.

In

this

lesson,you

are

introduced

to

the

financial

statements—balance

sheet,

incomestatement,

the

statement

of

Changes

in

Equity

and

the

statement

ofcash

flows.BAIDU·

If

you

were

an

investor

who

wanted

to

invest

in

an

internet-basedcompany,

how

would

you

know

whether

baidu

or

any

othercompany

is

a

good

choice?

What

information

would

you

need

tohelp

you

make

a

decision?You

can

get

accounting

information

from

a

company’s

financialstatements.

The

financial

statements

help

investors,

creditors,

andother

interested

parties

better

understand

a

company.

In

this

lesson,you

are

introduced

to

the

financial

statements—balance

sheet,

incomestatement,

the

statement

of

Changes

in

Equity

and

the

statement

ofcash

flows.1.1

WHAT

IS

ACCOUNTING?Accounting

provides

financialinformation

for

decision-makingin

the

business

world.Accounting

is“l(fā)anguage

of

business.”Accounting

is

a

service-basedprofession

that

providesreliable

and

relevant

financialinformation

useful

in

makingdecisions.1.2

FINANCIAL

ACCOUNTING

V.S

MANAGERIALACCOUNTINGAccounting

information

thatis

intended

to

satisfy

theneeds

of

resource

owners(external

users)

is

calledfinancial

accounting.Managerial

accounting

providesuseful

information

that

isneeded

in

operating

anorganization

by

internal

users.1.3

FINANCIAL

STATEMENTSThe

four

widely-used

financial

statements

abusiness

enterprise

uses

are:(1)

Income

statement;(2)

Statement

of

Changes

in

Equity;(3)

Balance

Sheet;(4)

Statement

of

Cash

Flows.1.4

INCOME

STATEMENTIncome

StatementFor

the

Period

Ended

2020Revenue$10

000Expenses

4

000Net

Income

$6

0001.5

REVENUERevenues

are

increases

inretained

earnings

fromdelivering

goods

or

service

tocustomers

or

clients.1.6

EXPENSEExpense

are

decreases

in

retained

earningsthat

result

from

operations.Expense

are

the

cost

of

doing

business

andare

the

opposite

of

revenues.Expenses

include

office

rent,

salaries,

andutility

payments

etc.1.7

STATEMENT

OF

CHANGES

IN

EQUITYABC

CompanyStatement

of

Changes

in

EquityFor

the

Period

Ended

2012Beginning

Contributed

Capital$0Plus:

Capital

Acquisition20

000Ending

Contributed

Capital

20

000Beginning

Retained

Earnings0Plus:

Net

Income6

000Less:

Distribution(4

000)Ending

Retained

Earnings

2

000

$22

000Total

Equity1.8

BALANCE

SHEET·ABC

Company·

Balance

Sheet

as

at

December

31,2012Assets$30

000Total

Assets

30

000LiabilitiesEquity8

000Contributed

Capital20

000Retained

EarningsTotal

Equity2

00022

000Total

Liability

andEquity

(Claims)

$30

0001.9

ASSETSAsset

refers

to

any

item

of

economicvalue

owned

by

an

individual

orcorporation.Assets

are

divided

into

the

followingcategories:

current

,long-term,

prepaidand

deferred

,and

intangible

assets1.10

LIABILITIESLiability

means

an

obligation

that

legallybinds

an

individual

or

company

to

settle

adebt.Liability

can

include

accounts

payable,taxes,

wages,

accrued

expenses,

anddeferred

revenues.Current

liabilities

are

debts

payable

withinone

year,

while

long-term

liabilities

aredebts

payable

over

a

longer

period.1.11

OWNER S

EQUITY

(CAPITAL)·

Owners’

equity

refers

to

ownership

interest

in

acorporation

in

the

form

of

common

stock

orpreferred

stock.

It

also

refers

to

total

assetsminus

total

liabilities,

in

which

case

it

is

alsoreferred

to

as

shareholders’

equity

or

net

worthor

book

value.1.12

STATEMENT

OF

CASH

FLOWSStatement

of

Cash

FlowsFor

the

Period

Ended

2019ASSIGNMENT：Translate

and

fill

in

the

blanks.翻譯下面報(bào)表。課本Assignment1學(xué)習(xí)任務(wù)單Task6Income

Statement（中文：

）For

the

Period

Ended

2020Balance

Sheet

（中文：

as

at

December

31,2020）$30

000

30

0008

000Assets（中文：

）Total

AssetsLiabilities（中文：

）Equity（中文：

）Contributed

Capital（中文：）20000Retained

Earnings（中文：）2000Total

Equity22000Total

Liability

and

Equity

(Claims)（

）Statement

of

Cash

Flows(中文：

)For

the

Period

Ended

2020Cash

Flows

from

Operating

Activities(中文：

)5

000Cash

Flows

from

Investment

Activities(中文：

)

0Cash

Flow

from

Financing

Activities(中文：

)

25

00030

0000Net

Increase

in

Cash(中文：

)Plus:Beginning

Cash

Balance(中文：Ending

Cash

Balance(中文：

))

$30

000Statement

of

Changes

in

Equity(中文：)·

For

the

Period

Ended

2012Beginning

Contributed

Capital(中文：

)Plus:

Capital

Acquisition$020

000Ending

Contributed

Capital

20

000Beginning

Retained

Earnings0Plus:

Net

Income6

000Less:

Distribution(4

000)Ending

Retained

Earnings

2

000

$22

000Total

EquityACTIVITIES:

HOW

TO

GET

THE

FINANCIAL

REPORT?You

can

learn

it

from

the

video

by

scanning

the

QR

code.ACTIVITIES:請(qǐng)閱讀星巴克公司報(bào)表，回答以下問題：1、按照?qǐng)?bào)表，寫出星巴克公司資產(chǎn)負(fù)債表的英文名稱（標(biāo)題），利潤(rùn)表的英文名稱（標(biāo)題），現(xiàn)金流量表的英文名稱（標(biāo)題），2、資產(chǎn)總額是多少？3、負(fù)債總額是多少？4、流動(dòng)資產(chǎn)總額是多少？5、所有者權(quán)益是多少？6、收入總額是多少？7、銷售成本是多少？8、經(jīng)營(yíng)活動(dòng)產(chǎn)生的現(xiàn)金流是多少？9、投資活動(dòng)產(chǎn)生的現(xiàn)金流是多少？10、融資活動(dòng)產(chǎn)生的現(xiàn)金流是多少？SUMMARY1.13

ACCOUNTING

EQUATIONAssets

=

ClaimsAssets

=

Liabilities

+

Equity？1.14

EXAMPLE

FOR

ASSETS

=

CLAIMSNow

let’s

see

how

the

elements

ofaccounting

equation

change

duringan

operating

cycle.We

will

have

a

few

transactionsand

will

follow

the

relevant

changes.1.15

HOW

DO

THE

ELEMENTS

OF

ACCOUNTINGEQUATION

CHANGE?·

(1)

Tom

Company

is

established

when

their

owners

pool

$10

000

into

thebusiness.

The

effects

of

assets

acquisition

on

the

accounting

equation

are:ClaimsAssets=Liabilities+Equity$10

000=$0+$10

000ClaimsAssets=Liabilities+EquityBeginningBalances$10

000=$0+$10

000Effect

ofBorrowing+$4

000=+$4

000EndingBalances$14

000=$4

000+$10

000·

(2)

Next,

assume

that

Tom

Company

obtains

an

additional

$4

000

of

assets

by

borrowing

them

from

creditors.

This

is

also

an

asset

source

transaction.

Note

that

thebeginning

balances

are

originated

from

the

ending

balances

of

the

last

transaction:EquityAssets=Liabilities+ContributedCapital+RetainedEarningsBeginningBalances$14

000=$4

000+$10

000+$0Effect

ofRevenue+$6

000+$6

000EndingBalances$20

000=$4

000+$10

000+$6

000·

(3)

Assume

that

Tom

Company

received

$6

000

in

exchange

for

services

that

itprovided

to

its

customers

(note

that

while

assets

increase,

retained

earnings

get

biggeralso):·

(4)

Assume

that

Tom

Company

had

been

required

to

use

$2

000

of

its

assets

to

earn$6

000

from

the

previous

transaction.

The

effect

of

the

asset

use

transaction

on

theaccounting

equation

is

shown

as

follows:EquityAssets=Liabilities+ContributedCapital+RetainedEarningsBeginningBalances$20

000=$4

000+$10

000+$6

000Effect

ofExpenses($2

000)($2

000)EndingBalances$18

000=$4

000+$10

000+$4

000·

(5)

Assume

Tom

Company

transfers

$500

of

assets

to

the

owners:EquityAssets=Liabilities+ContributedCapital+RetainedEarningsBeginningBalances$18

000=$4

000+$10

000+$4

000Effect

ofDistribution($500)($500)EndingBalances$17

000=$4

000+$10

000+$3

0001.16

ENDING

BALANCESAs

an

accounting

period

is

over,

ending

balances

of

the

period

change

into

beginningbalances

of

the

next

period

such

as

assets,

liabilities.At

the

end

of

an

accounting

period,

amounts

in

the

revenue,

expense,

and

distributionaccounts

are

transferred

to

Retained

Earnings.ACTIVITIES:Case

study案例:Can

you

explain

in

Chinese

what

the

following

transactions

are?

Please

point

out

howdo

the

transactions

affect

accounting

equation

and

fill

in

the

blanks.請(qǐng)用中文解釋下面的交易是什么意思？請(qǐng)分析指出這些交易對(duì)會(huì)計(jì)等式的影響然后填寫到表格空白處。請(qǐng)用中文解釋下面的交易是什么意思？請(qǐng)分析指出這些交易對(duì)會(huì)計(jì)等式的影響然后填寫到表格空白處。Tom

Company

is

established

when

their

owners

pool

$10

000

into

the

business.Next,

assume

that

Tom

Company

obtains

an

additional

$4

000

of

assets

by

borrowingthem

from

creditors.Assume

that

Tom

Company

received

$6

000

in

exchange

for

services

that

it

provided

toits

customers.Assume

that

Tom

Company

had

been

required

to

use

$2

000

of

its

assets

to

earn

$6

000from

the

previous

transaction.Assume

Tom

Company

transfers

$500

of

assets

to

the

ownersAssets=Liabilities+Owner's

EquityIncreaseDecreaseIncreaseDecreaseIncreaseDecrease12345TotalsNet

changeTotal

net

changeLESSON2THE

BALANCE

SHEET

AND

DOUBLE-ENTRY.Aims:1.

To

construct

a

balance

sheet

in

a

formatused

by

business.2.

To

identify

the

essential

features

of

a

recordbookkeeping

system.3.

To

apply

the

double

entry

rule

to

simpletransactions

of

a

sole

trader.4.

To

understand

the

aim

of

the

trial

balance

inthe

bookkeeping

system.5.

To

examine

the

inter-relationship

between

thedaily

business

records

and

the

final

accounts.2.1

INTRODUCTIONfCORPORATION·

McDonald’s

Corporation

is

the

world’s

leading

globalMCDONALD’Sfoodservice

retailer

with

more

than

37,000

locations.According

to

the

recent

annual

report

of

McDonald’s,this

big

Corporation

controls

about

$32

billion

in

totalassets

and

earns

more

than

$21

billion

in

annualrevenue.

McDonald’s

Corporation

must

somehowconduct

the

numerous

transactions

of

its

worldwideoperations.·

So

how

these

transactions

were

recorded

by

thecorporation

for

use

by

the

interested

parties?REVIEW:FinancialstatementsAll

organizations

must

prepare

financial

statements

periodically,

usuallyat

least

once

a

year.These

normally

comprise

three

main

financial

statements:Balance

SheetIncome

StatementStatement

ofCash

Flow2.2

THE

EFFECT

OF

TRANSACTIONS

ON

THE

BALANCE

SHEET·

John

starts

a

business,

selling

denim

clothes,

trading

as

“John

Clothing

Co.”.John

Clothing

Co.Balance

SheetAs

at

January

1stAssetsCash

&

Bank$60

000

60

000EquityJohn’s

Capital

60

000

$60

000Transaction:On

January

1st,

John

opens

abusiness

bank

account

with$60

000

of

his

own

money.2.3

THE

TWO

SECTIONS

OF

A

BALANCE

SHEET·

A

Balance

Sheet

is

divided

into

two

sections.

Every

transaction

of

thebusiness

will

affect

TWO

items

on

the

Balance

Sheet.

In

this

example

thetwo

items

are:Balance

Sheet·

(1)

Asset:

cash

at

bank;AssetsCash

&

Bank·

(2)

Equity:

John’s

capital.Equity$60

000

60

000John’s

Capital

60

000

$60

0002.4

BUSINESS

ENTITY·

For

accounting

purposes,

the

owner

and

the

business

are

treated

as

twoseparate.AssetsCash

&

BankMotor

Vehicles$44

00016

000

60

000EquityJohn’s

Capital

60

000

$60

000Transaction:On

January

2nd,

John

buys

a

secondhand

delivery

van

for

$16

000

payingwith

a

business

cheque.John

Clothing

Co.Balance

SheetAs

at

January

1st2.5

BUY

JEANS

NOT

YET

TO

PAY·

On

January

5th

the

business

buys

denim

jeans

from

the

manufacturer

to

sell

tocustomers.

The

jeans

cost

$12

000.

John

Clothing

Co.

will

pay

the

supplier

nextmonth.AssetsCash

&

Bank$44

000Stock12

000Motor

Vehicles16

000

72

000Account

Payable12

000EquityJohn’s

Capital60

00072

0002.6

THE

ORDERING

AND

CLASSIFICATION

OF

ASSETSAND

LIABILITIESIn

the

above

example,

theassets

were

listed

in

a

randomorder.

This

is

clearly

anunsatisfactory

method

ofcommunication;therefore

the

items

on

theBalance

Sheet

are

ordered

andclassified.2.7

THE

CLASSIFICATION

OF

ASSETSAssets

are

listed

on

theBalance

Sheet

in

terms

ofliquidity,

which

means

themost

temporary

assets(cash)

listed

first.The

assets

on

the

BalanceSheet

are

classified

intotwo

categories:(1)

Current

Assets

are

acquiredby

a

business

to

be

converted

intoother

assets

or

consumed,

in

thenormal

course

of

business,

withinone

year.(2)

Fixed

Assets

are

long

lifeassets

normally

acquired

by

abusiness

to

be

used

over

morethan

one

year

in

the

production

ofgoods

and

services.2.8

THE

CLASSIFICATION

OF

LIABILITIESThe

creditors

on

the

BalanceSheet

are

classified

into

twocategories:(1)

Creditors:

amounts

fallingdue

within

one

year.

These

aresometimes

called

CurrentLiabilities.(2)

Creditors:

amounts

fallingdue

after

more

than

one

year.These

are

sometimes

calledLong

Term

Liabilities.Task

1任務(wù)一ABC

companybalance

sheet31-Dec-19AssetsLiabilitiescurrent

assetscurrent

liabilitiesCash1,920Accounts

Payable2,800Accounts

Receivable160Salaries

Payable600total

current

assets2,080Notes

Payable5,800non-current

assetstotal

current

liabilities9,200Machinery&Equipment13,000non-current

liabilitiesLand13,600total

liabilities9,200Buildings10,400sharehoder's

equtiytotal

NON-current

assets37,000Capital

Stock20,000Retained

Earnings9,880total

sharehoder's

equtiyTOTAL

ASSETS39,080total

Liabilities

and

sharehoder's

equtiy39,080ANSWER:Retained

Earnings=39080-20000-9200=9880Listed

below

in

random

order

are

the

items

to

be

included

in

the

balance

sheet

of

Deep

River

Lodge

atDecember

31,

2019：Equipment.

.

.

.

.

.

.

.

.

.

.

.

.

.

$

9,000

Buildngs

.

.

.

.

.

.

.

.

.

.

.

.

.

.

$430,000Land

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

140,000

Capital

Stock.

.

.

.

.

.

.

.

.

.

.

.

?Accounts

Payable.

.

.

.

.

.

.

.

.

27,400

Cash

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.9,100Accounts

Receivabe

.

.

.

.

.

.

.

3,300

Furnishings.

.

.

.

.

.

.

.

.

.

.

.

.

22,600Salaries

Payable

.

.

.

.

.

.

.

.

.

13,200

Notes

Payable.

.

.

.

.

.

.

.

.

.

.

217,000Interest

Payable

.

.

.

.

.

.

.

.

.

.

4,000

Retaned

Earnings

.

.

.

.

.

.

.

.202,400Instructions：compute

the

amount

to

be

shown

for

Capital

Stock.Prepare

a

balance

sheet

at

December

31,

2019.

Include

a

proper

heading

and

organize

your

balancesheet.Deep

River

Lodge

companybalance

sheet31-Dec-19AssetsLiabilitiescurrent

assetscurrent

liabilitiesCash9,100Accounts

Payable27,400Accounts

Receivable3300Salaries

Payable13200total

current

assets12,400Notes

Payable217,000non-current

assetsInterest

Payable4,000Equipment9,000total

current

liabilities261,600Land140000non-current

liabilitiesBuildings430,000total

liabilitiesFurnishings22,600sharehoder's

equtiytotal

NON-current

assets601,600Capital

Stock150,000Retained

Earnings202,400total

sharehoder's

equtiyTOTAL

ASSETS614,000total

Liabilities

and

sharehoder's

equtiy614,000ANSWER:Capital

Stock.=614000-261600-202400=1500002.9

WORKING

CAPITAL·

Net

Current

Assets

(WorkingCapital)

is

the

differencebetween

current

assets

andcurrent

liabilities.2.10

JANE’S

BUSINESS·

On

the

business

balance

sheet,

theassets

owned

by

the

business

less

theliabilities

(creditors)

owed

by

the

businessequal

the

capital,

the

owners

stake

in

thebusiness.A

real

balance

sheet

will

beshown

in

the

video

for

yourunderstanding.

You

can

find

thevideo

by

scanning

the

QR

code.ACTIVITIES:

A

REAL

BALANCE

SHEETACTIVITIES:

A

REAL

BALANCE

SHEET觀看上述視頻，回答以下問題：1、When

is

the

fiscal

year

end

date

for

Starbucks?2、What

are

the

components

of

balance

sheet?3、Does

the

Balance

Sheet

balance?4、What

are

the

sub-categories

of

Assets?5、What

are

the

sub-categories

of

Liabilities?2.11

RECORDING

BUSINESS

TRANSACTIONSThe

Balance

Sheet

and

other

final

accountsof

a

business

are

drawn

up

at

the

end

of

theaccounting

period.

All

organizations

will,however,

need

to

record

their

transactionson

a

regular

basis

during

the

accountingperiod.For

each

transaction

it

will

be

necessary

torecord

the

following:(1)

the

amount

($);(2)

the

date;(3)

a

description

of

the

transaction.2.12

BASIC

RULES

FOR

RECORDING

BUSINESSTRANSACTIONS·

The

rules

for

recording

business

transactions

are

that

every

transaction

will

at

least

affect

two

items.The

dual

aspect

concept

states

that

every

businesstransaction

requires

recordation

in

two

different

accounts.This

concept

is

the

basis

of

double

entry

accounting,which

is

required

by

all

accounting

frameworks

in

order

toproduce

reliable

financial

statements.2.13

AN

EXAMPLE

OF

DUAL

ASPECT

CONCEPTA

motor

vehicle

is

bought

for

cash

of

$16

000.The

two

items

affected

are:(1)

Motor

Vehicle(+

$16

000);(2)

Cash(-$16

000).Each

item

must

have

its

own

record

i.e.

“account”

in

the

books(ledgers)

of

the

business.2.14

DOUBLE

ENTRY

RULE·

ASSETS

e.g.

and

EXPENSES

e.g.DebitCreditINCREASES(+)DECREASES(-)·

EQUITY

,CREDITORS,INCOME

and

PROVISIONSDebitCreditDECREASES(-)INCREASES(+)2.15

T-ACCOUNTAccount

TitleDecreases

&

IncreasesIncreases

&

DecreasesThe

left

side

of

the

T-account

is

called

Debit,and

the

right

side

is

called

Credit.2.16

TWO

IMPORTANT

RULES

ABOUT

DOUBLE-ENTRYRECORDING

SYSTEM(1)

Debits

increase

assets

and

decrease

liabilities

and

equity;(2)

Credits

increase

liabilities

and

equity

and

decrease

assets.2.17

APPLICATION

OF

THE

DOUBLE

ENTRY

RULE1.

Identify

the

two

items

involved

in

thetransaction

(e.g.

Cash

and

Capital).2.

Ensure

there

is

an

account

for

each

item(e.g.

Cash

A/c).3.

Taking

each

item

independently:4.

Repeat

the

process

in

3

with

the

otheritem

involved

in

the

transaction.5.

Check

that

one

account

has

been

debitedand

the

other

has

been

credited.2.18

AN

EXAMPLE

OF

THE

DOUBLE

ENTRY

RULE·

On

January

1st

John

starts

in

business,

trading

as

“JohnClothing

Co.”.

He

puts

$60

000

of

his

own

money

into

abusiness

bank

account.Debit(=+)$Credit(=-)$Jan

1Capital60

000Jan

2Motor

Vehicles16

000Cash

&

Bank

AccountDebit(=-)

$Credit(=+)$Jan

1Cash60

000Capital

AccountDebit(=+)$Credit(=-)$Jan

2Cash16

000Motor

Vehicles

Account2.19

ANOTHER

EXAMPLE

OF

THE

DOUBLE

ENTRYA

company,

called

Hike’s

Consultants,started

its

operations

on

January

31st,

2019when

the

owner,

Mr.

Hike,

contributed

cashin

it.All

the

accounts

had

zero

balances,

and

wewill

see

how

each

transaction

affect

T-accounts

and

the

accounting

equation.All

transactions

took

place

in

2019.2.20

TRANSACTION

NO.1:STARTING

THE

OPERATIONS·

Hike’s

Consultants

started

its

operations

on

January

31st

when

theowner

made

$20

000

cash

contribution.Assets=Liabilities+EquityCashContributed

CapitalDebitCredit++(1)20

000(1)20

0002.21

TRANSACTION

NO.2:

PURCHASING

OFFICESUPPLIES·

On

May

15th,

Hike’s

Consultants

purchased

$800

of

officesupplies

from

a

local

supply

company

on

account.Assets=Liabilities+EquitySuppliesAccounts

PayableDebitCredit++(2)800(2)800·

On

May

20th,the

company

provided

services

on

account

(i.e.,

itwill

collect

cash

later,

even

though

it

had

already

providedservices)

to

Mercy

Food

Store.

Mr.

Mercy’s

business

was

billed

for$3

200.Assets=Liabilities+EquityAccounts

ReceivableConsulting

RevenueDebitCredit++(3)3200(3)32002.22

TRANSACTION

NO.3:

PROVIDING

SERVICES

ONACCOUNT2.23

TRANSACTION

NO.4:PAYING

CASH

FOR

OPERATING

EXPENSES·

On

April

5th,the

company

paid

$1

200

cash

for

operating

expenses.Assets=Liabilities+EquityCashOperatingExpenseCredit-(4)1

200Debit+

Expense-

Equity(4)1

2002.24

TRANSACTION

NO.5:

BORROWING

MONEY

FROMBANK·

On

May

31st,due

to

cash

limits

Hike’s

Consultants

decided

toborrow

$8

000

from

the

Local

Business

Bank.

The

company

issued

a

note

that

had

a

one-year

term

and

carried

7%

annualinterest

rate.Assets=Liabilities+EquityCashNotes

PayableDebitCredit++(5)8

000(5)8

0002.25

TRANSACTION

NO.6:

PAYING

RENT·

On

June

1st,Mr.

Hike

saw

that

the

business

was

growing

andin

this

connection

made

a

decision

to

rent

a

larger

office.

$4800

cash

was

paid

in

advance

for

a

one-year

rent

of

a

newoffice.Assets=ClaimsPrepaid

Rent+CashDebitCredit+-(6)4

800(6)4

8002.26

TRANSACTION

NO.7:RECEIVING

CASH

FOR

THE

PROVIDED

SERVICES·

On

June

15th,Hike’s

Consultants

received

$3

000

cash

from

MercyFood

Store

for

the

provided

services

(see

Transaction

No.3).Assets=ClaimsCash+Accounts

ReceivableDebit+(7)3

000Credit-(7)3

0002.27

TRANSACTION

NO.8:RECEIVING

AN

ADVANCED

CASH

PAYMENT·

On

June

31st,Mr.

Hike

signed

up

a

contract

with

MikeCompany

to

perform

consulting

services.

Hike’sConsultants

received

an

advanced

cash

payment

in

theamount

of

$7

200

and

the

term

of

the

contract

was

oneyear.Assets=Liabilities+EquityCashUnearned

RevenueDebitCredit++(8)7

200(8)7

2002.28

TRANSACTION

NO.9:RECEIVING

CASH

FOR

OPERATING

ACTIVITY·

On

June

31st,Hike’s

Consultants

represented

Mr.

Ebert

(a

client)in

the

court,

for

what

the

company

received

$1

400

cash.Assets=Liabilities+EquityCashConsulting

RevenueDebitCredit++(9)1

400(9)1

4002.29

TRANSACTION

NO.10:

LOANING

TO

OTHERCOMPANY·

On

June

31st,

Hike’s

Consultants

loaned

Jam

BuildingCompany

(Investment

Activity)

$6

000.

Jam

BuildingCompany

issued

a

one-year,

8%

note.Assets=ClaimsNotes

Receivable+CashDebitCredit+-(10)6

000(10)6

0002.30

TRANSACTION

NO.11:PAYING

CASH

TO

PURCHASE

OFFICE

EQUIPMENT·

On

June

31st,

Mr.

Hike

paid

$4

000

cash

to

purchase

a

newtable

and

several

chairs.

The

office

equipment

is

expected

tohave

a

useful

life

of

2

years

and

a

salvage

value

of

$800.Assets=ClaimsOfficeEquipment+CashDebitCredit+-(11)4

000(11)4

00