Question

Analyze the effect of transactions o assets, liabilities, and stockholders equity. E3.2 (LO 1), AP Brady Company entered into these transactions during May 2022, 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 $30,000 from Ladd on account. 3. Paid $4,000 cash for May rent on storage space. 4. Performed computer services worth $19,000 on account. 5. Performed computer services for Wharton Construction Company for $5,000 cash. 6. Paid Western States Power Co. $8,000 cash for energy usage in May. 7. Paid Ladd for the computers purchased in (2). 8. Incurred advertising expense for May of $1,300 on account. 9. Received $12,000 cash from customers for contracts billed in (4). Instructions Using the following tabular analysis, show the effect of each transaction on the accounting equation. Put explanations for changes to revenues or expenses in the right-hand margin. Use Illustration 3.4 as a model. Assets = Liabilities + Stockholders' Equity Accounts Accounts Common Retained Earnings Cash + Receivable + Equipment = Payable + Stock + Revenues - Expenses - Dividends E3.3 (LO 1), AP During 2022, its first year of operations as a delivery service, Persimmon Corp. entered into the following transactions. Determine effect of transactions on basic accounting equation.

Answer 1

• Requirement, as asked

NOTE: If required, enter EXPENSES amount as a NEGATIVE FIGURE with MINUS SIGN

	Cash	Accounts receivables	Equipment	Accounts Payable	Common Stock	Revenues	Expenses	Dividends
1	$40,000				$40,000
2			$30,000	$30,000
3	($4,000)						$4,000		Rent Expense
4		$19,000				$19,000			Service revenues
5	$5,000					$5,000			Service revenues
6	($8,000)						$8,000		Energy expenses
7	($30,000)			($30,000)
8				$1,300			$1,300		Advertising expense
9	$12,000	($12,000)
End Bal	$15,000	$7,000	$30,000	$1,300	$40,000	$24,000	$13,300	$0