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

Question

During 2012, its first year of operations as a delivery service, Underwood Corp. entered into the following transactions. 1. Issued shares of common stock to investors in exchange for $185,010 in cash. 2. Borrowed $47,640 by issuing bonds. 3. Purchased delivery trucks for $67,600 cash. 4. Received $15,400 from customers for services provided. 5. Purchased supplies for $5,900 on account. 6. Paid rent of $5,000. 7. Performed services on account for $10,240. 8. Paid salaries of $28,690. 9. Paid a dividend of $10,050 to shareholders. Using the following tabular analysis, show the effect of each transaction on the accounting equation. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced. See Illustration 3-3 for example.) Assets = Liabilities + Stockholders

Explanation / Answer

Issued shares 185010 Borrowed 47640 Purchased delivery trucks 67600 Purchased Supplies -5900 Received 15400 Paid rent -5000 Performed services on account -10240 Paid salaries -28690 Paid a dividend -10050

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