During 2012, its first year of operations as a delivery service, Lopez Corp. ent

Question

During 2012, its first year of operations as a delivery service, Lopez Corp. entered into the following transactions. 1. Issued shares of common stock to investors in exchange for $100,000 in cash. 2. Borrowed $45,000 by issuing bonds. 3. Purchased delivery trucks for $60,000 cash. 4. Received $16,000 from customers for services provided. 5. Purchased supplies for $4,200 on account. 6. Paid rent of $5,600. 7. Performed services on account for $10,000. 8. Paid salaries of $28,000. 9. Paid a dividend of $11,000 to shareholders. Using the following tabular analysis, show the effect of each transaction on the accounting equation.

Explanation / Answer

The bottom line is the final balance sheet ****
--------------------------------------…
. . . . ASSETS . . . . . . = . . LIABILITIES . . . . + . . . . OWNERS EQUITY

1) . . 100,000 . . . . . . .= . . . . . 0 . . . . . . . . . + . . . . . . . 100,000
2) . . . 45,000 . . . . . . = . . . . 45,000 . . . . . . + . . . . . . . . . . 0
3) [Transaction has no effect on balance sheet - it exchanges one asset for another]
4) . . . 16,000 . . . . . . .= . . . . .0 . . . . . . . . . . + . . . . . . . .16,000
5) . . . 15,000 . . . . . . .= . . . .15,000 . . . . . . . + . . . . . . . . . .0
6) . . . (5,600) . . . . . . .= . . . . .0 . . . . . . . . . . + . . . . . . . . (5,600)
7) . . . 10,000 . . . . . . .= . . . . .0 . . . . . . . . . . + . . . . . . . . 10,000
8) . . .(28,000) . . . . . . = . . . . .0 . . . . . . . . . . + . . . . . . . .(28,000)
9) . . .(11,000) . . . . . . = . . . . .0 . . . . . . . . . . + . . . . . . . .(11,000)

T) . . 141,400 . . . . . . .= . . . 60,000 . . . . . . . .+ . . . . . . . . 81,400

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