The document describes 7 business transactions undertaken by Gay Gillen to establish her eTravel business. The transactions include Gillen investing $30,000, purchasing an office for $20,000, buying supplies for $500, earning $5,500 in revenue, performing $3,000 in services, paying $3,300 in expenses, and paying $300 of the supplies. The accounting equation assets = liabilities + equity is provided to show how each transaction impacts at least two accounts to keep the equation in balance.

1. Objective 6
Transaction Analysis.

2. Accounting for Business
Transactions
What is a transaction?
It is any event that both affects the financial
position of the business and can be reliably
recorded.

3. Accounting for Business
Transactions
1 Gay Gillen invests $30,000 to begin Gay
Gillen eTravel.
2 Gillen purchases an office location, paying
$20,000 in cash.
3 She buys office supplies, agreeing to pay
$500 in 30 days.
4 She earns and collects $5,500 revenues.

4. Accounting for Business
Transactions
5 Gillen performs services, and the client
agrees to pay $3,000 within one month.
6 During the month, she pays $3,300 for
expenses incurred.
7 Gillen pays $300 to the store from which
she purchased $500 worth of supplies.
What is the effect of these transactions on
the accounting equation?

5. Accounting for Business
Transactions
Owner’s
Assets = Liabilities + Equity
1) Cash + $30,000 + $30,000
2) Cash – 20,000
Land + 20,000
3) Supplies + 500 + 500
4) Cash + 5,500 + 5,500
5) Receivable + 3,000 + 3,000
6) Cash – 3,300 – 3,300
7) Cash – 300 – 300
Totals + $35,400 + 200 + $35,200

6. Accounting for Business
Transactions
Notice that the equation always stays in
balance.
Each transaction affects at least two
accounts, sometimes more.
Some transactions affect only one side of
the equation; some affect both sides.

7. Accounting for Business
Transactions
Other transactions that took place were as
follows:
The business collected $1,000 from the
client.
She withdrew $2,000 from the business.

8. End of Chapter 1