Effects of a transaction on assets, liabilities, and equity

Mrs. Sanchez, the owner, withdraws $2,100 cash from the business to take her spouse on a weekend vacation in Paris. Mrs. Moore, the owner, purchases $4,000 of merchandise on credit. Mr. Lee, the owner, purchases office supplies for $2,350 from The Depot on account. On June 15, Mrs. Baker, the owner, pays $600 for May's utility bill. Earlier, on May 31, Mrs. Baker had accrued the utility cost. On June 15, Mr. Anderson, the owner, pays $610 for May's utility bill. Earlier, on May 31, Mr. Anderson had accrued the utility cost. Miss Carter, the owner, performs services for some clients and is paid in cash immediately, $850. In this transaction, the current month's rent expense is paid with cash. So Cash, an asset, decreases. An expense is incurred (the Rent Expense account increases). This expense reduces the income for the fiscal year, which in turn reduces equity. So Owner's Equity decreases. Here is the effect of the transaction on the accounting equation.