Manning Company entered into these transactions during May 2014, its first month

Question

Manning Company entered into these transactions during May 2014, its first month of operations. Stockholders invested $40,600 in the business in exchange for common stock of the company Purchased computers for office use for $25,530 from Dell on account. Paid $2,720 cash for May rent on storage space. Performed computer services worth $15,540 on account. Performed computer services to Lawton Construction Company for $4,370 cash. Paid Southern States Power Co. $6,040 cash for energy usage in May. Paid Dell for the computers purchased in (2). Incurred advertising expense for May of $2,340 on account. Received $13,030 cash from customers for contracts billed in (4). 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.)

Explanation / Answer

Assets = Liabilities Stockholders' Equity s.no. cash A / R Equipment = A / P Common stock Retained Earnings Revenues (-) Expenses 1 40600 = 40600 2 25530 = 25530 3 -2720 = 2720 4 15540 = 15540 5 4370 = 4370 6 -6040 = 6040 7 -25530 = -25530 8 = 2340 2340 9 13030 -13030 = Total 23710 2510 25530 = 2340 40600 19910 -11100

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