After several months of planning, Jasmine Worthy started a hair cutting business called Expressions. The following events occurred during its first month of business.
a. On August 1, Worthy invested $3,000 cash and $15,000 of equipment in Expressions.
b. On August 2, Expressions paid $600 cash for furniture for the shop.
c. On August 3, Expressions paid $500 cash to rent space in a mall for August.
d. On August 4, it purchased $1,200 of equipment on credit for the shop (using a long term note payable).
e. On August 5, Expressions opened for business. Cash received from haircutting services in the first week and a half of business (ended August 15) was $825.
f. On August 15, it provided $100 of haircutting services on account.
g. On August 17, it received a $100 check for services previously rendered on account.
h. On August 17,it paid $125 cash to an assistant for hours worked during the grand opening.
i. Cash received from services provided during the second half of August was $930.
j. On August 31, it paid a $400 installment toward principal on the note payable entered into on August 4.
k. On August 31, Worthy made a $900 cash withdrawal from the company for personal use.
1)Define double-entry system and state the rules for double entry.
2) Apply the steps for transaction analysis and processing to simple transactions.
3) Define financial position, state the accounting equation, and show how they are affected by simple transactions.