Question

Sunland Company entered into these transactions during May 2022, its first month of operations. 1 2. 3. 5. Stockholders invested $43,500 in the business in exchange for common stock of the company. Purchased computers for office use for $32,200 from Ladd on account. Paid $5,300 cash for May rent on storage space. Performed computer services worth $17,800 on account Performed computer services for Wharton Construction Company for $5,600 cash. Paid Western States Power Co. $7,600 cash for energy usage in May, Paid Ladd for the computers purchased in (2). Incurred advertising expense for May of $1,900 on account. Received $12,900 cash from customers for contracts billed in (4). 6. 7. 8. 9. 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.)

Answer 1

Sunland Company + + + + II + + II + w N + + + II + Accounting Equation Asset Liabilities Stockholders Equity Trans Cash + Accounts Receivable + Equipment = Accounts Payable + Common Stock + Retained Earnings + + + Revenues - Expenses 1 43500 + 43500 32200 32200 + 3 -5300 5300 Rent Expense 4 17800 17800 Service Revenue 5 5600 5600 Service Revenue 6 -7600 7600 Utility Expense 7 -32200 -32200 8 1900 1900 Advertising Expense 9 12900 - 12900 + Totals 16900 4900 32200 1900 + 43500 23400 14800 + + + + + + II + + + + Il + + + II + + + + + + Il 11 + + + + + 54000 54000