Question

Exercise 3-3 During 2017, its first year of operations as a delivery service, Monty Corp. entered into the following transactions, 1. Issued shares of common stock to investors in exchange for $109,000 in cash. 2. Borrowed $53,000 by issuing bonds. 3. Purchased delivery trucks for $60,000 cash. 4. Received $14,000 from customers for services performed. 5. Purchased supplies for $4,100 on account. 6. Paid rent of $6,200. 7. Performed services on account for $11.900. 8. Paid salaries of $28.600. 9. Paid a dividend of $11,200 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. Liability or Equity item that was reduced, see Illustration 3-3 for example.)

Answer 1

	Assets									=	Liabilities			+	Stockholders equity
	Cash	+	Accounts Receivable	+	Supplies	+			Equipment	=	Accounts payable	+	Bonds Payable	+	Common stock	+	Retained earnings
																	Revenue	-	Expenses	-	Dividends
1	$1,09,000														$1,09,000							Issue Stock
2	$53,000												$53,000									Issued bonds
3	-$60,000								$60,000													Delivery Trucks acquired
4	$14,000																$14,000					Revenue from services performed
5					$4,100						$4,100											Purchased supplies on account
6	-$6,200																		-$6,200			Paid rent in cash
7			$11,900														$11,900					Services provided on account
8	-$28,600																		-$28,600			Paid salaries in cash
9	-$11,200																				-$11,200
	$70,000		$11,900		$4,100				$60,000		$4,100		$53,000		$1,09,000		$25,900		-$34,800		-$11,200
			Grand Total-Assets		$1,46,000								Grand Total-Liabilities and stockholders equity						$1,46,000