Downtown Company entered into these transactions during May 2007. 1. Purchased c

Question

Downtown Company entered into these transactions during May 2007.

1. Purchased computers for office use for $35,000 from Dell on account.
2. Paid $4,000 cash for May rent on storage space.
3. Received $12,000 cash from customers for contracts billed in April.
4. Provided computer services to Brieske Construction Company for $5,000 cash.
5. Paid Southern States Power Co. $11,000 cash for energy usage in May.
6. Stockholders invested an additional $30,000 in the business in exchange for common stock of the company.
7. Paid Dell for the terminals purchased in (1).
8. Incurred advertising expense for May of $1,000 on account.
Using the following tabular analysis, show the effect of each transaction on the accounting equation. (If there is no amount for a box enter 0. All boxes must be filled. If entering a negative number use negative (-) sign preceding the number. )

Assets = Liabilities + Stockholders' Equity
Cash +Accounts Receivable +Office Equipment =Accounts Payable +Common Stock + Retained Earnings
1.
2.
3.
4.
5.
6.
7.
8.
Totals

Explanation / Answer

Assets = Liabilities + Stockholders' Equity Cash +Accounts Receivable +Office Equipment =Accounts Payable +Common Stock + Retained Earnings 1. 35,000 in office equipment and 35,000 in Accounts payable 2. (-) $4,000 in cash and (-) $4,000 in retained earnings 3. $12,000 in cash and (-) 12,000 in accounts receivable 4. $5,000 in cash and $5,000 in retained earning 5. (-) $11,000 in cash and (-) $11,000 in retained earning. 6. $30,000 in cash and $30,000 in common stock 7. (-) $35,000 cash and (-) $35,000 in accounts payable 8. $1,000 in accounts payable and (-) $1,000 in retained earnings

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