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PDtax, Master's Degree
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Experience:  MBA/CPA, Former college instructor and tutor.
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# Construct an example of a transaction between two parties.

### Customer Question

Construct an example of a transaction between two parties. Identify what accounts are affected and how changes in those accounts impact the accounting equation. Explain the purpose for recording the transaction on the company’s books.
Contentiously, I need this answered by today. Will provide a bonus.
Submitted: 1 year ago.
Expert:  PDtax replied 1 year ago.
Welcome to the site. I'm PDtax, and will be helping you today.
Is there anything specific to add in background on your question? Otherwise, I can answer it later this morning.
Expert:  PDtax replied 1 year ago.
Let's use a simple example of a sale of goods for cash by A to Customer B. Both companies have just started in business.
Store A
Cash = \$500
Inventory = \$400
Stock \$900
Assets (900) = equity (900)
Customer B
Cash \$1,100
Stock \$1,100
Assets (1100) = Equity (1100)
B purchases goods from A for \$600. Their cost to A was \$300.
After the sale, A:
Cash (1100) + inventory (100) = equity (900 + 300 income)
1200=1200
After the sale, B:
Cash (500) + inventory (600) = equity (1100)
The accounting equation stays in balance for both enterprises.
Customer: replied 1 year ago.

Excellent Service. Thanks!!

Expert:  PDtax replied 1 year ago.

You're welcome.PDtax

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