Effect of Selling Personal Furniture and Investing into Business
Investing personal funds into a business involves a capital contribution, which impacts the accounting equation. Let's break down the effects of this transaction:

1. Increase in Cash:
- When personal furniture is sold, cash is received in exchange for it. This results in an increase in the cash balance of the business.

2. Increase in Capital:
- The cash received from selling personal furniture is then invested in the business as capital. This increases the owner's equity in the business.

3. Impact on Accounting Equation:
- The accounting equation, Assets = Liabilities + Owner's Equity, will be affected by this transaction.
- The cash received from selling personal furniture will increase the asset side of the equation.
- The investment of this cash into the business will increase the owner's equity side of the equation.

4. Balance Sheet Impact:
- The balance sheet will reflect these changes, with an increase in both cash and owner's equity.
- The total assets and total equity of the business will increase after this transaction.
In summary, selling personal furniture and investing the proceeds into a business will increase the cash balance and owner's equity of the business. This transaction will have a positive impact on the financial position of the business and will help in furthering its growth and operations.

Increase in capital and increase in cash by 40000