Question

Question 2 Sara Obermeyer decides to open a pizza parlor near MHC that will operate as a corporation. Analyze the following transactions for the month of June in terms of their effect on the basic accounting equation. Record each transaction by showing the increase or decrease of each item affected. It is not necessary to identify the cause of changes in stockholders' equity. Transactions 1. Sara Obermeyer invests $25,000 cash in exchange for common stock to start a pizza parlor business on June 2. Purchased baking equipment for $4,000 paying $2,000 in cash and the remainder due in 30 days. 3. Purchased cooking supplies for $1,200 cash. 4. Received a bill from Campus News for $200 for advertising in the campus newspaper. 5. Cash receipts from customers for pizza sales amounted to $1,500. 6. Paid salaries of $200 to student workers. 7. Billed the South Hadley football Team $ 100 for pizzas ordered. 8. Paid $200 to Campus News for advertising that was previously billed in Transaction 4. 9. Sara Obermeyer was paid dividends of $800. 10. Incurred utility expenses for month on account, $200. Cash + Accts. Rec. + Cooking supplies + Baking equip. = Accts. payable + Common stock + Ret. Earnings Totals

Answer 1

	Cash +	Accts Rec. +	Cooking Supplies +	Baking Supplies +	=	Accts. Payable+	Common Stock	Retained Earnings
1.	+25000				=		+25000
2.	-2000			+4000	=	+2000
3.	-1200		+1200		=		0
4.	0				=	+200		-200
5.	+1500				=			+1500
6.	-200				=			-200
7.		+100			=			+100
8.	-200				=	-200
9.	-800				=			-800
10.	0				=	+200		-200
Total	22100	100	1200	4000	=	2200	25000	200