Question

Sandhill Co. entered into these transactions during May 2022, its first month of operations.

1.		Stockholders invested $37,000 in the business in exchange for common stock of the company.
2.		Purchased computers for office use for $33,500 from Ladd on account.
3.		Paid $2,500 cash for May rent on storage space.
4.		Performed computer services worth $18,400 on account.
5.		Performed computer services for Wharton Construction Company for $6,300 cash.
6.		Paid Western States Power Co. $6,200 cash for energy usage in May.
7.		Paid Ladd for the computers purchased in (2).
8.		Incurred advertising expense for May of $3,200 on account.
9.		Received $12,500 cash from customers for contracts billed in (4).

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 far right column. (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 3-4 for example.)

Sandhill Co. entered into these transactions during May 2022, its first month of operations. 1. Stockholders invested $37,000 in the business in exchange for common stock of the company. 2. Purchased computers for office use for $33,500 from Ladd on account. 3. Paid $2,500 cash for May rent on storage space. 4. Performed computer services worth $18,400 on account. 5. Performed computer services for Wharton Construction Company for $6,300 cash. 6. Paid Western States Power Co. $6,200 cash for energy usage in May. 7. Paid Ladd for the computers purchased in (2). 8. Incurred advertising expense for May of $3,200 on account. 9. Received $12,500 cash from customers for contracts billed in (4). 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 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 3-4 for example.) Assets = Liabilities Stockholders' Equity Cash Accounts Receivable + Equipment Accounts Payable Common Stock Retained Earnings Revenues - Expenses

Answer 1

	Assets			Liabilities	Stockholders' Equity
	Cash	Accounts Receivable	Equipment	Accounts Payable	Common Stock	Retained Earnings
						Revenues	Expenses
1	37000				37000
2			33500	33500
3	-2500						-2500	Rent expense
4		18400				18400		Service Revenue
5	6300					6300		Service Revenue
6	-6200						-6200	Utilities expense
7	-33500			-33500
8				3200			-3200	Advertising expense
9	12500	-12500
	13600	5900	33500	3200	37000	24700	-11900