Chapter 3, Problem 3.2AP

(a)

To determine

Accounting Equation:

The accounting equation implies the relationship between the assets, liabilities, and the stockholders equity. The balance of both the assets and the liabilities, stockholders equity must be equally balanced. The accounting equation is as follows;

$\begin{array}{l}Assets=Liabilities+StockholdersEquity\hfill \\ \hfill \end{array}$

To show: The effects of each transaction on the accounting equation.

(b)

To determine

Income statement:

An income statement is one of the financial statements which shows the revenues, and expenses of the company. The income statement is prepared to ascertain the net income of the company.

To prepare: An income statement for the month of May, 2017.

(c)

To determine

Classified balance sheet:

The financial statement with grouping or classification of similar assets and liabilities under subheadings is known as classified balance sheet.

To prepare: A classified balance sheet at May.31, 2017.