Question

During 2017, its first year of operations as a delivery service, Marigold Corp. entered into the following transactions. 1. Issued shares of common stock to investors in exchange for $120,000 in cash. 2. Borrowed $53,000 by issuing bonds. 3. Purchased delivery trucks for $51,000 cash. 4. Received $17.000 from customers for services performed. 5. Purchased supplies for $6,200 on account. 6. Paid rent of $5.800. 7. Performed services on account for $10.900. 8. Paid salaries of $26,600. 9. Paid a dividend of $10.200 to shareholders. Using the following tabular analysis, show the effect of each transaction on the accounting equation. Put explanations for changes to Stockholders Equity in the far right column. (If a transaction causes a decrease in Assets, Liabilities or Stockholders'Equity, place a negative sign for parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced, see Illustration 3-3 for example) 1 Type here to search

Answer 1

Accounting equation

	Assets							=	Liabilities			+	Stockholder's equity
	Cash	+	Account receivable	+	Supplies	+	Equipment	=	Account payable	+	Bonds payable	+	Common Stock	+	Retained earnings
															Revenue	-	Expense	-	Dividends
1.	120000												120000							Issue common Stock
2	53000										53000
3	-51000						51000
4	17000														17000					Service revenue
5					6200				6200
6	-5800																-5800			Rent expense
7			10900												10900					Service revenue
8	-26600																-26600			Salaries expense
9	-10200																		-10200	Dividend paid
	96400		10900		6200		51000		6200		53000		120000		27900		-32400		-10200