Transaction & Tabular Analysis
Mohammed Moin Uddin Reza Nadim
Bangladesh University of Professionals (BUP)
Transaction
• Transactions are those events which change the Financial Position of
an organization. Financial position means balance sheet or accounting
equation (A=L+OE).
• Each transaction must have a dual effect on the accounting equation.
For example, if an asset is increased, there must be a corresponding:
(1) decrease in another asset, or (2) increase in a specific liability, or
(3) increase in owner’s equity.
• External transactions involve economic events between the company
and some outside enterprise. Internal transactions are economic
events that occur entirely within one company
Change of Financial Position
1. Net
Change •Payment to Accounts Payable
2. Structural
Change •Purchase of Furniture in Cash
Identification of Transactions
Serial Events Assets = Liabilities + Equity
1. Opening Balance 20,000 14,000 6,000
2. Payment to Accounts Payable 3,000 Taka - 3,000 - 3,000
17,000 11,000 6,000
3. Purchase of Furniture in Cash 5,000 Taka + 5,000
- 5,000
17,000 11,000 6,000
4. Owner invested 10,000 Taka in the business + 10,000 + 10,000
27,000 11,000 16,000
5. Received 5,000 Taka from Accounts Receivable + 5,000
- 5,000
27,000 11,000 16,000
6. Owner withdrew 10,000 Taka from business - 10,000 - 10,000
17,000 11,000 6,000
Transaction Analysis
Transaction (1): Ray Neal decides to open a computer programming
service which he names Softbyte. On September 1, 2012, Ray Neal
invests $15,000 cash in the business.
Transaction Analysis
Transaction (2): Purchase of Equipment for Cash. Softbyte purchases
computer equipment for $7,000 cash.
Transaction Analysis
Transaction (3): Softbyte purchases for $1,600 from Acme Supply
Company computer paper and other supplies expected to last several
months. The purchase is made on account.
Transaction Analysis
Transaction (4): Softbyte receives $1,200 cash from customers for
programming services it has provided.
Transaction Analysis
Transaction (5): Softbyte receives a bill for $250 from the Daily News
for advertising but postpones payment until a later date.
Transaction Analysis
Transaction (6): Softbyte provides $3,500 of programming services
for customers. The company receives cash of $1,500 from customers,
and it bills the balance of $2,000 on account.
Transaction Analysis
Transaction (7): Softbyte pays the following expenses in cash for
September: store rent $600, salaries of employees $900, and utilities
$200.
Transaction Analysis
Transaction (8): Softbyte pays its $250 Daily News bill in cash.
Transaction Analysis
Transaction (9): Softbyte receives $600 in cash from customers who
had been billed for services [in Transaction (6)].
Transaction Analysis
Transaction (10): Ray Neal withdraws $1,300 in cash from the
business for his personal use.
Problem
Transactions for the month of August are shown below. Prepare a
tabular analysis.
1. The owner invested 25,000 cash in the business.
2. The company purchased 7,000 of office equipment on credit.
3. The company received 8,000 cash in exchange for services
performed.
4. The company paid 850 for this month’s rent.
5. The owner withdrew 1,000 cash for personal use.
Solution
Carla Quentin started her own consulting firm, Quentin Consulting, on May 1, 2012. The
following transactions occurred during the month of May.
May 1. Carla invested 7,000 cash in the business.
2. Paid 900 for office rent for the month.
3. Purchased 600 of supplies on account. DO IT
5. Paid 125 to advertise in the County News.
9. Received 4,000 cash for services provided.
12. Withdrew 1,000 cash for personal use.
15. Performed 5,400 of services on account.
17. Paid 2,500 for employee salaries.
20. Paid for the supplies purchased on account on May 3.
23. Received a cash payment of 4,000 for services provided on account on May 15.
26. Borrowed 5,000 from the bank on a note payable.
29. Purchased office equipment for 4,200 on account.
30. Paid 275 for utilities.
Requirement: Prepare a Tabular Analysis using the following chart of accounts
Continued - DO IT
Chart of Accounts
Cash, Accounts Receivable, Supplies, Equipment, Notes Payable,
Accounts Payable, Owner’s Capital, Owner’s Drawings, Revenues,
Expenses
Now, Create the template as follow and conduct the tabular analysis.
Hint: Total Assets = 20,800, Total Liabilities & Equity = 20,800
