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1. The effects of each transaction on the individual items of the accounting equation are as follows:
Cash $70,000 + (40,000) + (15,000) + (500) + 4,000 + (3,275) + 1,800 + (700) + (1,800) = $14,525
Accounts Receivable $2,800 - 1,800 = $1,000
Office Supplies $1,200
Equipment $10,000 + 15,000 + 1,700 = $26,700
Office Suites $40,000
Accounts Payable $1,200 + $1,700 + (700) = $2,200
Capital–L. Lopez $70,000 + 10,000 = $80,000
Dividends $3,275
Revenues $2,800 + 4,000 = $6,800
Advertising Expenses $500
Wages Expense $1,800
Total $2,300
2. The company's Net income is $4,500.
Net income = Revenue - Expenses
= $2,300 ($6,800 - $2,300).
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1. Use additions and subtractions within the table to show the dollar effects of each transaction on individual items of the accounting equation.
2. Determine the company’s net income.