Assume Mr. X establishes sole proprietorship business known as XYZ Taxi on August 1, 2012.

A) Mr. X deposit $10,000 in a bank account in the name of XYZ Taxi.

B) XYZ taxi co. purchased land, which costs $ 7,500 paid in cash.
C) XYZ taxi co. purchased $850 of gasoline, oil, and other supplies; agreed to pay in the
near future.
D) XYZ taxi co. paid for creditor $ 400, the effect is decreasing the assets and liabilities.
E) XYZ taxi co. earned fares of $ 4,500, receiving the amount in cash
F) XYZ taxi co. incurred the following expenses and paid during the month were; wages
$1,125; rent $850; utilities $ 150; miscellaneous $ 75.
G) XYZ’s taxi co. supplies at the end of the month determined that $ 250 is on hand, the
reminder 600 (850-250) have been used in the operation of the business.
H) At the end of the month Mr. X withdraws cash from the business $1,000 for personal use.

1) Indicate the effect of each transaction on the accounting equation elements

2) Prepare financial statements (income statement, a statement of owner’s equity,
balance sheet, and statement of cash flows for August.