Selected Transactions for Mac's Garage Are Shown Below

question 124

Essay

Selected transactions for Mac's Garage are shown below. State the effect in dollars on the accounting equation of each transaction.
a)George McGuire invests $4,000 cash into a business known as Mac's Garage.
b)George purchases supplies on account for $300.
c)George purchases a new welder for $1,500 cash.
d)George receives the garage's telephone bill amounting to $100 to be paid next month.
e)George withdraws $200 cash for personal use.
f)Garage revenue for the current period amounts to $2,500. (All revenue transactions involved cash.) $\begin{array} { | l | l | l | l | } \hline \text { Item } & \text { Assets } & \text { Liabilities } & \begin{array} { c } \text { Owner's } \\\text { Equity }\end{array} \\\hline \text { a) } & & & \\\hline \text { b) } & & & \\\hline \text { c) } & & & \\\hline \text { d) } & & & \\\hline \text { e) } & & & \\\hline \text { f) } & & & \\\hline \text { Totals } & & & \\\hline\end{array}$

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Definitions:

Residual Income

Income that remains after all costs of capital have been deducted from net operating income, a measure of profitability.

Division

A distinct part of a larger company that operates semi-independently, typically focusing on a particular product line or market sector.

ROI Calculations

The process of determining the return on investment by dividing the net profit by the initial cost of the investment.

Margin

The difference between the selling price of a good or service and the cost of producing it, often expressed as a percentage of the selling price.