Show the Effects of Each Transaction on the Accounting Equation $\$ 20,000$

question 21

Essay

Show the effects of each transaction on the accounting equation by indicating under the proper heading the dollar amount of increase or decrease for each transaction listed below.Compute the resulting accounting equation.
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a. Owner deposited $\$ 20,000$ in his new business checking account.
b. Supplies were purchased for $\$ 300$ on account.
c. Paid a $\$ 1,200$ premium for six months of liability insurance.
d. Purchased supplies for $\$ 200$ cash.
e. Purchased equipment for $\$ 4,000$ by paying $\$ 1,000$ ; the rest to be paid in six months.
f. Paid the $\$ 300$ bill outstanding (from transaction $b$ ).
g. Owner withdrew $\$ 700$ from the business for personal use.

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Definitions:

Optimal Prices

The price point that maximizes a firm's profits or achieves the best balance between sales volume and profit margins.

Economies of Scale

The financial benefits that companies gain as a result of their size, production volume, or operational scope, where the cost for each unit of production typically falls as the scale expands.

Third-Degree Price Discrimination

A pricing strategy where different prices are charged to different groups of consumers for the same product, based on elasticity of demand.

Monopoly Power

The ability of a single seller to set prices and control the market for a good or service without significant competition.