Question

1. 2. Cullumber Computer Corporation had the following opening account balances at the end of April: Cash $5,000, Accounts Receivable $6,500; Accounts Payable $2,500: Common Shares $5,000; and Retained Earnings $4,000. It entered into the following transactions during the month of May. Purchased equipment on account for $8.400. Paid $2.000 for rent for the month of May. Provided computer services for $3,900 on account. Paid Ontario Hydro $300 cash for utilities used in May. Borrowed $19.800 from the bank. Paid supplier for equipment purchased in transaction 1. Purchased a one-year accident insurance policy for $500 cash. Received $2,700 cash in partial payment of the account owed in transaction 3. Declared and paid $500 of dividends to shareholders. Paid income tax of $250 for the month. 3. 4. 5. 6. 7. 8. 9. 10. Prepare an equation analysis of the effects of the opening balances and above transactions on the expanded accounting equation of a transaction causes a decrease in Assets, Liabilities or Shareholders' 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.)

Answer 1

+ + + + + + + + + Assets Liabilities Stockholder's equity Income statement Event no Cash + Accounts Receivable Prepaid Insurance + Equipment Accounts payable + Bank Loan + Common Stock + Retained Earnings Revenues - Expenses = Net Income Opening balance $ 5,000 + $ 6,500 + $ 2,500 + $ 5,000 $ 4,000 1 $ 8,400 = $ 8,400 + 2 $ -2.000 + $ -2,000 - $ 2,000 = $ -2,000 3 $ 3,900 + $ 3,900 $ 3,900 = $ 3,900 4 $ -300 + + $ -300 - $ 300 = $ -300 5 $ 19,800 + $ 19.800 + 6 $ -8.400 + $ -8,400 7 $ -500 + $ 500+ 8 $ 2,700 $ -2,700 9 $ -500 + + + $ -500 10 $ -250 + $ -250 $ 250 $ -250 Total $ 15,550 $ 7,700 $ 500 $ 8,400 2,500 $ 19.800 $ 5,000 + $ 4,850 $ 2,550 $ 1,350 + + + + + + + E +