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What accounts are involved? Cash and Equipment are involved. STEP 2. What are the classifications of the accounts involved? Cash is an asset account, and Equipment is an asset account. STEP 3. Are the accounts increased or decreased? Cash is decreased because Con- ner used cash to purchase the equipment. Equipment is increased because Conner’s Whitewater Adventures has more equipment now than it had before. STEP 4. Is the equation in balance after the transaction is recorded? Yes. Remember that the recording of each transaction must yield an equation that is in balance.
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Conner, Cash 1 Equip. 1 Supplies 1 Ins. 1 Rec. 5 Payable 1 Capital 1 Revenue 2 Expenses PB 53,150 1 47,520 1 (n) 2620 675 1 1,875 1 6,750 5 2,115 1 95,200 1 14,750 2 2,095 2620 NB 52,530 1 47,520 1 675 1 1,875 1 6,750 5 1,495 1 95,200 1 14,750 2 2,095 (++++++++++)++++++++++* (++++++++++)++++++++++* 109,350 109,350 Transaction (o). Company paid an expense in cash, $2,360. Conner’s Whitewater Adventures pays wages of a part-time employee, $2,360. indd 28 01/12/11 7:20 PM CHAPTER 1 29 Asset, Liability, Owner’s Equity, Revenue, and Expense Accounts Assets 5 Liabilities 1 Owner’s Equity Ppd.