Cullumber Company entered into these transactions during May 2017, its first month of operations. 1. Stockholders invested $40,000 in the business in exchange for common stock of the company 2. Purchased computers for office use for $30,600 from Ladd on account. 3.Paid $2,600 cash for May rent on storage space. 4. Performed computer services worth $20,000 on account. 5. Performed computer services for Wharton Construction Company for $3,500 cash. 6. Paid Western States Power Co. $7,200 cash for energy usage in May. 7. Paid Ladd for the computers purchased in (2) 8. Incurred advertising expense for May of $2,500 on account. 9. Received $10,300 cash from customers for contracts billed in (4). Using a tabular analysis, show the effect of each transaction on the accounting equation. Provide explanations for changes to Stockholders' Equity. 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. Use the following formula as the layout: Assets Liabilities + Shareholders' Equity Cash + Accounts Receivable + Equipment Accounts Payable + Common Stock + Retained Earnings
Cullumber Company entered into these transactions during May 2017, its first month of operations. 1. Stockholders invested $40,000 in the business in exchange for common stock of the company 2. Purchased computers for office use for $30,600 from Ladd on account. 3.Paid $2,600 cash for May rent on storage space. 4. Performed computer services worth $20,000 on account. 5. Performed computer services for Wharton Construction Company for $3,500 cash. 6. Paid Western States Power Co. $7,200 cash for energy usage in May. 7. Paid Ladd for the computers purchased in (2) 8. Incurred advertising expense for May of $2,500 on account. 9. Received $10,300 cash from customers for contracts billed in (4). Using a tabular analysis, show the effect of each transaction on the accounting equation. Provide explanations for changes to Stockholders' Equity. 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. Use the following formula as the layout: Assets Liabilities + Shareholders' Equity Cash + Accounts Receivable + Equipment Accounts Payable + Common Stock + Retained Earnings
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Cullumber Company entered into these transactions during May 2017, its first month of operations.
1. Stockholders invested $40,000 in the business in exchange for common stock of the company
2. Purchased computers for office use for $30,600 from Ladd on account.
3.Paid $2,600 cash for May rent on storage space.
4. Performed computer services worth $20,000 on account.
5. Performed computer services for Wharton Construction Company for $3,500 cash.
6. Paid Western States Power Co. $7,200 cash for energy usage in May.
7. Paid Ladd for the computers purchased in (2)
8. Incurred advertising expense for May of $2,500 on account.
9. Received $10,300 cash from customers for contracts billed in (4).
Using a tabular analysis, show the effect of each transaction on the accounting equation. Provide
explanations for changes to Stockholders' Equity.
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.
Use the following formula as the layout:
Assets Liabilities + Shareholders' Equity
Cash + Accounts Receivable + Equipment Accounts Payable + Common Stock + Retained
Earnings
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