Question

Transaction 2: Purchase of Land

View all the transactions, and do all the accounting, from the perspective of the business – not from the viewpoint of the proprietor/owner. The business purchases land for an office location, paying cash of $20,000. This transaction effects the accounting effect the accounting equation of Smart Touch Learning as follows:

Assets	+	Liabilities           +	Owner’s Equity
Cash	Land		Sheena Bright, Capital
(1)30,000		=	?
?	+        ?
Bal 10,000	20,000		?
			?

The cash purchase of land increases one asset, Land, and decreases another asset, Cash. After the transaction is completed, the business has cash of $10,000, land of $20,000, no liabilities, and owner equity of $30,000. Note that the total balances on both sides of the equation must always be equal.

Answer 1

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Purchase of Land
ASSETS		LIABILITIES		OWNER’S EQUITY
Cash	+	Office Supplies	+	Land	=	Accounts Payable	+	Sheena Bright, Capital
30,000.00	+		+		=		+	30,000.00
(20,000.00)	+		+	20,000.00	=		+
10,000.00	+	-	+	20,000.00	=	-	+	30,000.00