Question

Transaction 3: Purchase of Office Supplies

The e-learning agency buys stationery and other office supplies that the company will use in the future, agreeing to pay $500 within 30 days. This transaction increases both the assets and liabilities of the business, as follows:

              ASSETS                                           LIABILITIES      OWNER’S EQUITY

Cash	+	Office Supplies	+	Land		Accounts Payable	+	Sheena Bright, Capital
Bal								?
10,000				?
		?			=	?
		?		?		?		?

Office supplies is an asset, not an expense, because the supplies can be used in the future. The liability created by this transaction is an Account payable. A payable is always a liability.

Answer 1

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Purchase of Office Supplies
ASSETS		LIABILITIES		OWNER’S EQUITY
Cash	+	Office Supplies	+	Land	=	Accounts Payable	+	Sheena Bright, Capital
10,000.00	+		+		=		+	10,000.00
	+	500.00	+		=	500.00	+
10,000.00	+	500.00	+	-	=	500.00	+	10,000.00