During 2010, its first year of operations as a delivery service, Lopez Corp. entered into the following
Question:
During 2010, its first year of operations as a delivery service, Lopez Corp. entered into the following transactions.
1. Issued shares of common stock to investors in exchange for $100,000 in cash.
2. Borrowed $45,000 by issuing bonds.
3. Purchased delivery trucks for $60,000 cash.
4. Received $16,000 from customers for services provided.
5. Purchased supplies for $4,200 on account.
6. Paid rent of $5,600.
7. Performed services on account for $10,000.
8. Paid salaries of $28,000.
9. Paid a dividend of $11,000 to shareholders.
Instructions
Using the following tabular analysis, show the effect of each transaction on the accounting equation. Put explanations for changes to Stockholders' Equity in the right-hand margin. Use Illustration 3-3 shown below as a model. ("P/P/E" refers to Property, Plant, and Equipment.)
Illustration3-3
Common StockCommon stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Step by Step Answer:
Accounting Tools For Business Decision Making
ISBN: 9780470377857
3rd Edition
Authors: Paul D. Kimmel