The following illustrates how the business transactions of ABC Realty are recorded in a simplified accounting system.

1. Owners' Investments - Invested $50,000 in business in exchange for 5,000 shares of $10 par value stock.

Assets						=	Liab.	Owners' Equity
	Cash	A/R	Supplies	Land	Building		A/P	Common Stock	Retained Earnings
1	$50,000							$50,000
A = $50,000							L + OE = $50,000
Notice A = L + SE is always in balance.

2. Purchase of Assets with Cash - Purchased a lot for $10,000 and a small building on a lot for $25,000.

Assets						=	Liab.	Owners' Equity
	Cash	A/R	Supplies	Land	Building		A/P	Common Stock	Retained Earnings
1	$50,000							$50,000
2	-35,000			$10,000	$25,000			$50,000
bal	$15,000			$10,000	$25,000			$50,000
A = $50,000							L + OE = $50,000
This transaction only affects one side of the accounting equation: assets. Whenever a transaction affects only one side of the accounting equation, both assets and liabilities and owners' equity remain unchanged.

3. Purchase of Assets by Incurring a Liability - Purchased office supplies for $500 on credit.

Assets						=	Liab.	Owners' Equity
	Cash	A/R	Supplies	Land	Building		A/P	Common Stock	Retained Earnings
1	$50,000							$50,000
2	-35,000			$10,000	$25,000			$50,000
3			$500				$500
bal	$15,000		$500	$10,000	$25,000		$500	$50,000
A = $50,500							L + OE = $50,500

4. Payment of a Liability - Paid $200 of the $500 owed for supplies.

Assets						=	Liab.	Owners' Equity
	Cash	A/R	Supplies	Land	Building		A/P	Common Stock	Retained Earnings
1	$50,000							$50,000
2	-35,000			$10,000	$25,000			$50,000
3			$500				$500
4	-200						-200
bal	$14,800		$500	$10,000	$25,000		$300	$50,000
A = $50,300							L + OE = $50,300

5. Revenues - Earned and received a commission of $1,500 in cash.

Assets						=	Liab.	Owners' Equity
	Cash	A/R	Supplies	Land	Building		A/P	Common Stock	Retained Earnings
1	$50,000							$50,000
2	-35,000			$10,000	$25,000			$50,000
3			$500				$500
4	-200						-200
5	1,500								$1,500
bal	$16,300		$500	$10,000	$25,000		$300	$50,000	$1,500
A = $51,800							L + OE = $51,800

6. Earned a commission of $2,000 to be received at a later date.

Assets						=	Liab.	Owners' Equity
	Cash	A/R	Supplies	Land	Building		A/P	Common Stock	Retained Earnings
1	$50,000							$50,000
2	-35,000			$10,000	$25,000			$50,000
3			$500				$500
4	-200						-200
5	1,500								$1,500
6		$2,000							2,000
bal	$16,300	$2,000	$500	$10,000	$25,000		$300	$50,000	$3,500
A = $53,800							L + OE = $53,800

7. Collection of Accounts Receivable - Received $1,000 from client for commission earned earlier in the month.

Assets						=	Liab.	Owners' Equity
	Cash	A/R	Supplies	Land	Building		A/P	Common Stock	Retained Earnings
1	$50,000							$50,000
2	-35,000			$10,000	$25,000			$50,000
3			$500				$500
4	-200						-200
5	1,500								$1,500
6		$2,000							2,000
7	1,000	-1,000
bal	$17,300	$1,000	$500	$10,000	$25,000		$300	$50,000	$3,500
A = $53,800							L + OE = $53,800

8. Expenses - Paid $1,000 to rent equipment for office.

Assets						=	Liab.	Owners' Equity
	Cash	A/R	Supplies	Land	Building		A/P	Common Stock	Retained Earnings
1	$50,000							$50,000
2	-35,000			$10,000	$25,000			$50,000
3			$500				$500
4	-200						-200
5	1,500								$1,500
6		$2,000							2,000
7	1,000	-1,000
8	-1,000								-1,000
bal	$16,300	$1,000	$500	$10,000	$25,000		$300	$50,000	$2,500
A = $52,800							L + OE = $52,800

9. Expenses - Paid $400 in wages to part-time helper.

Assets						=	Liab.	Owners' Equity
	Cash	A/R	Supplies	Land	Building		A/P	Common Stock	Retained Earnings
1	$50,000							$50,000
2	-35,000			$10,000	$25,000			$50,000
3			$500				$500
4	-200						-200
5	1,500								$1,500
6		$2,000							2,000
7	1,000	-1,000
8	-1,000								-1,000
9	-400								-400
bal	$15,900	$1,000	$500	$10,000	$25,000		$300	$50,000	$2,100
A = $52,400							L + OE = $52,400

10. Expense - Record utilities expense of $300 incurred in December but not yet paid.

Assets						=	Liab.	Owners' Equity
	Cash	A/R	Supplies	Land	Building		A/P	Common Stock	Retained Earnings
1	$50,000							$50,000
2	-35,000			$10,000	$25,000			$50,000
3			$500				$500
4	-200						-200
5	1,500								$1,500
6		$2,000							2,000
7	1,000	-1,000
8	-1,000								-1,000
9	-400								-400
10							300		-300
bal	$15,900	$1,000	$500	$10,000	$25,000		$600	$50,000	$1,800
A = $52,400							L + OE = $52,400

11. Dividends - Declared and paid dividend of $600.

Assets						=	Liab.	Owners' Equity
	Cash	A/R	Supplies	Land	Building		A/P	Common Stock	Retained Earnings
1	$50,000							$50,000
2	-35,000			$10,000	$25,000			$50,000
3			$500				$500
4	-200						-200
5	1,500								$1,500
6		$2,000							2,000
7	1,000	-1,000
8	-1,000								-1,000
9	-400								-400
10							300		-300
11	-600								-600
bal	$15,300	$1,000	$500	$10,000	$25,000		$600	$50,000	$1,200
A = $51,800							L + OE = $51,800