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During the month, a company enters into the following transactions: Borrows $8,750 of cash from the bank...

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Accounting

During the month, a company enters into the followingtransactions:

  • Borrows $8,750 of cash from the bank by signing a formalagreement to repay the loan in 2 years.
  • Buys $6,900 of new equipment on account.
  • Pays off $4,900 of accounts payable.
  • Pays off $2,450 of notes payable.

Required:

  1. Show the effect of these transactions on the basic accountingequation.

  2. Prepare the journal entries that would be used to record thetransactions.

Answer & Explanation Solved by verified expert
3.8 Ratings (624 Votes)
The fundamental Accounting equation also called as Balanace sheet equation represents the relationship between Assests liabilities and equity of person or business It is the foundation for the double entry booking system For each transactions total debits    See Answer
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