Name:______________________ Class time (circle): 9:40 11:20
CHAPTER 1 EXAM REVIEW PROBLEMS
Problem 1: Effect of transactions on the accounting equation.
Jake Ordaz started Lascassas Landscaping in December, and he had the following transactions during the
first month. For each of the transactions below, indicate the impact that the transaction has on the total
assets, liabilities and owner’s equity of the company. An example is provided for you.
TRANSACTIONS ASSETS LIABILITIES OWNER’S
EQUITY
Example: On December 1, Jake invested $100,000
of cash and $150,000 of equipment in the
company.
Increases No Effect Increases
1. On Dec. 2nd, the company purchased $1,000
of supplies on credit from Staples.
2. On Dec. 3rd, the company provided
landscaping services to Smith Company for
$2,000 cash.
3. On Dec. 5th, the company paid Staples $500
related to the credit purchase on December 2nd.
4. On Dec. 6th, the company paid $2,400 for
insurance for 12 months on the company’s
equipment. This payment is for insurance
from January to December of the next year.
5. On Dec. 7th, the company paid Home Depot
$350 for equipment rental for equipment it had
used that week.
6. On Dec. 8th, the company provided $3,500 of
services to the City of Murfreesboro on credit.
7. On Dec. 10th, the company received $2,800
from Lassiter Company. The company will
provide services to Lassiter Company in
January.
8. On Dec. 26th, the company purchased
equipment for $5,000.
9. On Dec. 27th, the company received $3,500
from the City of Murfreesboro, in payment for
the services provided on Dec. 8th.
10. On Dec. 31st, the company paid an employee
$3,000 for wages for the month of December.
11. On Dec. 31st, Jake withdrew $2,000 from the
business.
Problem 2: Classifying accounts, normal balances and the financial statements
