In this section, the following debit and credit summary will be used to record the transactions of Big Dog Carworks Corp. into T-accounts.
Transaction 1
Transaction 2
Transaction 3
Transaction 4
Transaction 5
Transaction 6
Transaction 7
Transaction 8
Transaction 9
Transaction 10
After the January transactions of Big Dog Carworks Corp. have been recorded in the T-accounts, each account is totalled and the difference between the debits and credits is calculated, as shown in the following diagram. The numbers in parentheses refer to the transaction numbers used in the preceding section. To prove that the accounting equation is in balance, the account balances for each of assets, liabilities, and shareholders’ equity are added. Notice that total assets of $22,100 equal the sum of total liabilities of $10,100 plus shareholders’ equity of $12,000.
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