Brady Company entered into these transactions during May 2022, its first month of operations. 

1. Stockholders invested $40,000 in the business in exchange for common stock of the company. 

2. Purchased computers for office use for $30,000 from Ladd on account. 

3. Paid $4,000 cash for May rent on storage space. 

4. Performed computer services worth $19,000 on account. 

5. Performed computer services for Wharton Construction Company for $5,000 cash. 

6. Paid Western States Power Co. $8,000 cash for energy usage in May. 

7. Paid Ladd for the computers purchased in (2). 

8. Incurred advertising expense for May of $1,300 on account. 

9. Received $12,000 cash from customers for contracts billed in (4). 

Instructions 

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 right-hand margin. Use Illustration 3.4 as a model. 

Transcribed Image Text:

Stockholders' Equity Retained Earnings Assets = Liabilities + Common Stock Accounts Accounts Cash + Receivable + Equipment Dividends Payable + Revenues Expenses