Week 2 — Twelve Transactions, One Equation: The Shop's First Month

Assignment 2 of the term — analyze the bicycle shop's twelve Month 1 transactions in the accounting equation, find the month's totals and its effect on retained earnings, and explain to someone outside accounting why the owners' claim is not the shop's cash.

This adaptive assignment uses a coaching dialogue to help you turn a first attempt into exact, well-reasoned work. You remain the author. The coach asks questions, checks the reasoning you show, and waits for you to revise before it produces the required report. In Week 1 you learned who reads financial statements and that a corporation is an entity separate from its owners. This week you learned assets, liabilities, and stockholders' equity, the accounting equation, and the four-question routine for transaction analysis. This week's lecture tutorial, quiz, discussion, and Accounting Workshop practice the same ideas from other angles; this assignment is where you put them together.

The task

You will use Dataset A from this week's chapter: the twelve Month 1 transactions of the course's running case, an illustrative bicycle repair and sales shop organized as a corporation by two founders. It describes no real business. Here are the twelve events, in order:

1. Day 1: the founders invest $30,000 cash in exchange for 30,000 shares of $1-par common stock.
2. Day 2: the shop pays $12,000 cash for repair equipment.
3. Day 3: it buys $900 of shop supplies on account.
4. Day 4: it pays $2,400 for a 12-month insurance policy that begins on Day 1.
5. Day 6: a cycling club pays $1,200 in advance for a season of tune-ups not yet performed.
6. Day 15: it performs repairs for walk-in customers and collects $3,500 cash.
7. Day 18: it performs $1,800 of repairs for a delivery company on account.
8. Day 20: it pays $1,500 rent for the month.
9. Day 22: it pays $600 of the $900 owed for supplies.
10. Day 25: it collects $1,000 from the delivery company on its account.
11. Day 28: it pays $1,600 wages to its part-time mechanic.
12. Day 30: it pays a $500 cash dividend to the shareholders.

Use no debits or credits this week; show every change as a plus or a minus to a named account.

Part A — analyze all twelve. For each transaction, write the four questions' replies in one line: what happened; which accounts change; in which direction and by how much; and the running totals of assets, liabilities, and stockholders' equity after it, checked so that assets equal liabilities plus equity. Then name which of the five patterns each transaction follows (asset swap; asset and liability both up; asset and liability both down; asset and equity both up; asset and equity both down). Then work this problem, showing your reasoning:

1. After the twelve transactions, the shop's asset balances are Cash $17,100, Accounts Receivable $800, Supplies $900, Prepaid Insurance $2,400, and Equipment $12,000. What are the shop's total assets?

Part B — retained earnings and the check. Work this problem first, showing your reasoning:

1. In Month 1 the shop's revenues total $5,300, its expenses total $3,100, and it pays $500 of dividends. What is the month's total effect on retained earnings?

Then show that total stockholders' equity is Common Stock plus that effect, and that total liabilities plus total stockholders' equity equals the total assets you found in Part A. In two or three sentences, say why the $500 dividend lowers retained earnings but is not an expense, and why the $1,200 from the cycling club is not revenue in Month 1.

Explain it to a non-expert

A friend who is thinking of lending the shop money looks at your work and asks, "The shop shows more stockholders' equity than cash, but equity is what the owners have, so that much must be in the bank, right?" Write a 3–5 sentence message in everyday words that explains what stockholders' equity is, why it is not the same as the shop's cash, and one honest limit of these Month 1 totals (they come before any month-end updates). Explain any term your friend might not know.

For a different, ungraded example, imagine a roommate who asks why their "net worth" is not the same as the money in their checking account. Model answer: "Your net worth is everything you own minus everything you owe, so it counts your laptop and your bike, not just your checking account. If you still owe a friend for concert tickets, that debt comes off the top. So your net worth can be bigger or smaller than your bank balance. One limit: it is a snapshot of one day, and it changes as soon as you buy or pay something."

Use that pattern for your message to the friend, with your own explanation of the shop.

Reflect on your revision

After you revise, answer one of these two options in 2–4 sentences; they carry the same weight:

• (a) Which change made one of your transaction analyses more exact, and which definition showed you it was needed?
• (b) Which of this week's classic wrong turns did your first draft come closest to, and what question will you ask yourself next time to catch it?

Part 1 — Student instructions

1. Draft Part A, Part B, and your message to the friend before opening a chatbot.
2. Open any course-approved chatbot. Copy the entire Coach Prompt box, including its first and last marker lines, and paste it as one message. The coach will ask for your draft and then work one question at a time.
3. Reply in your own words. Use the coach's feedback to revise at least one analysis, total, or part of your message, even if your first attempt was strong, and then answer reflection option (a) or (b).
4. Continue until the prompt's exit condition is met.
5. Save the chat's share link and copy the final report exactly as the coach gives it.

The chatbot is a coach, not a ghostwriter. It must draw out your reasoning rather than write your analyses, your totals, or your message for you. If it records the club's advance as revenue, files the dividend as an expense, or adds a total differently from you, recheck the figure against Chapter 2 before you use it.

Coach Prompt

COPY EVERYTHING BELOW THIS LINE
ROLE: You are a careful learning coach for an introductory financial accounting course. Draw out and challenge MY thinking about this week's ideas: assets, liabilities, and stockholders' equity; the accounting equation, Assets = Liabilities + Stockholders' Equity; Common Stock and retained earnings; revenues raising retained earnings while expenses and dividends lower it; and transaction analysis with four questions (what happened, which accounts change, in which direction, does the equation still balance). Do not write my assignment for me and do not invent work I did not show. Use no debits or credits. Never invent a figure, a rule, or a standard, and give no tax, legal, or investment advice.

ASSIGNMENT: Work through these two problems in order, one at a time. Do not invent, replace, or reorder a problem. The data are the course's illustrative running case, a bicycle repair shop organized as a corporation, Month 1: T1 Day 1 founders invest $30,000 cash for 30,000 shares of $1-par common stock; T2 Day 2 pays $12,000 cash for repair equipment; T3 Day 3 buys $900 of supplies on account; T4 Day 4 pays $2,400 for a 12-month insurance policy beginning Day 1; T5 Day 6 a cycling club pays $1,200 in advance for tune-ups not yet performed; T6 Day 15 collects $3,500 cash for repairs performed; T7 Day 18 performs $1,800 of repairs for a delivery company on account; T8 Day 20 pays $1,500 rent; T9 Day 22 pays $600 of the $900 owed for supplies; T10 Day 25 collects $1,000 from the delivery company on its account; T11 Day 28 pays $1,600 wages; T12 Day 30 pays a $500 cash dividend.
PROBLEM P1: After the twelve transactions, the shop's asset balances are Cash $17,100, Accounts Receivable $800, Supplies $900, Prepaid Insurance $2,400, and Equipment $12,000. What are the shop's total assets?
PROBLEM P2: In Month 1 the shop's revenues total $5,300, its expenses total $3,100, and it pays $500 of dividends. What is the month's total effect on retained earnings?
For P1 I must also analyze all twelve transactions with the four questions, running totals of assets, liabilities, and equity after each, and the pattern each follows. For P2 I must also show total stockholders' equity as Common Stock plus that effect, check that liabilities plus equity equals total assets, and say why the dividend is not an expense and the club's advance is not revenue; then write a 3-5 sentence message to a friend in everyday words. After revising, I answer reflection option (a) or (b) from my assignment page.

SCORING CRITERIA: Score only evidence I supply, out of 100 points. Transaction analysis on the twelve transactions (P1): 40 if all twelve are analyzed with the right accounts and directions, the running totals balance after each, the patterns are named, and total assets are worked as a sum of the five balances; 30 if one or two transactions have a wrong account, direction, or running total, or the patterns are missing; 20 if three to five transactions are wrong, or total assets are not worked; 10 if at least four transactions are analyzed correctly but the rest are missing or wrong; 0 otherwise. Retained earnings and the equation check (P2): 25 if the retained earnings effect is worked as revenues minus expenses minus dividends, equity is shown as Common Stock plus that effect, the check that liabilities plus equity equals total assets is shown, and both explanations (the dividend and the club's advance) are correct; 15 if one of those parts is missing or wrong; 8 if two or more parts are missing or wrong but the effect on retained earnings is attempted with the three drivers; 0 if no attempt. Plain-language explanation for a non-expert (P2): 20 if the message is in everyday words, explains what stockholders' equity is, says why it is not the shop's cash, and names a limit of the Month 1 totals; 10 if it can be followed but omits the cash point or the limit, or leaves a term unexplained; 0 if missing. Revision and reflection (P2): 15 if I show a before-and-after change plus a reflection on why it is better; 8 if only one of the two; 0 if neither.

Do NOT invent grading rules.

DIALOGUE RULES: Ask exactly one question per message and wait for my reply. Start by asking for my complete first attempt. Build each next question from my exact words. Probe an unsupported claim and ask me to check it against the definitions. If I add a column, ask me to show the addition rather than redoing it for me. Keep the conversation focused on questions rather than completed work.

ENGAGEMENT GUARDS: A greeting, copied prompt, yes/no reply, or one-word reply is not a substantive exchange. Do not flatter or accept agreement as evidence. Praise only a concrete move I made. If evidence is missing, say what is missing and ask for it. Require a real revision plus a short reflection on why the revision is better. Do not issue the report early.

EXIT CONDITION: Continue until at least five substantive exchanges have occurred AND I have supplied both problems with the twelve analyses, the retained earnings work and check, both explanations, and the message to the friend AND revised at least one part AND reflected on the revision. Stop only after whichever requirement happens last.

REPORT: After the exit condition is satisfied, output exactly these labelled lines in this order. Replace X with the exact earned score. Base every line only on evidence in this chat; write "Not supplied" for missing evidence and never raise the score for polished chatbot prose.
STUDENT'S SCORE: X/100
EVIDENCE FOR THE SCORE: [specific evidence from my twelve analyses, my retained earnings work, and my message]
REVISION MADE: [what I changed and why]
STRENGTH: [one earned strength]
NEXT STEP: [one concrete improvement]
Then tell me to submit this report, my revised work, and the share link.
COPY EVERYTHING ABOVE THIS LINE

Deliverables

Submit these three items in the assignment entry:

• your revised work: the twelve transaction analyses with running totals and patterns, total assets worked as a sum, the retained earnings effect, the equity and equation check, both explanations, your message to the friend, and your reflection — written, as a spreadsheet, or recorded as audio or video with a transcript; every form is graded by the same scoring criteria;
• the coach's five-line report; and
• the conversation share link.

Submit in any accessible file type or as a link; a recorded response may be submitted as audio or video with a transcript, or as text.

Equivalent route (no AI required)

This route assesses the same Week 2 skills — analyzing a transaction with the four questions, keeping the accounting equation in balance after every transaction, finding the effect on retained earnings from revenues, expenses, and dividends, keeping equity apart from cash, and explaining the owners' claim to someone outside accounting — for comparable time and effort, about 75 minutes, the same as the coached route. Complete Part A, Part B, the message to the friend, and one reflection option. Then audit your own first draft against the attached scoring criteria, line by line: for each of the twelve transactions, add the running totals again and confirm that assets equal liabilities plus equity; circle every transaction where equity changes and name the driver (an owner investment, a revenue, an expense, or a dividend); and check that your message says equity is a claim, not cash. Write a second draft. Add a 150–200 word revision memo that names one change you made, the definition or total that prompted it, and one question you still have. Submit the revised work, your completed criteria checklist, and the revision memo in the assignment entry; together they replace the share link and the coach's report. This route uses the same scoring criteria and the same points, with no penalty for choosing it.

How you'll be graded

The full analytic rubric is attached to this assignment in Canvas.

Academic integrity and AI use

The analyses, totals, explanations, message, revision, and reflection must be your own words and your own arithmetic. Do not ask the chatbot to write any of them or to add evidence you did not produce. Submit an honest share link from your own dialogue. The equivalent route keeps the same workload and evidence and requires no AI account.

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