Jessica Bell started her own consulting firm, Bell Consulting Inc., on May 1, 2001. The following transactions occurred during the month of May:

May 1. Stockholders invested $10,000 cash in the business.

2 Paid $800 for office rent for the month.

3 Purchased $500 of supplies on account.

5 Paid $50 to advertise in the County News.

9 Received $1,000 cash for services provided.

12 Paid $200 cash dividend.

15 Performed $3,000 of services on account.

17 Paid $2,500 for employee salaries.

20 Paid for the supplies purchased on account on May 3.

23 Received a cash payment of $2,000 for services provided on account on May 15.

26 Borrowed $5,000 from the bank on a note payable.

29 Purchased office equipment for $2,400 on account.

30 Paid $150 for utilities.

Instructions

(a) Show the effects of the previous transactions on the accounting equation using the following format:

Include margin explanations for any changes in Retained Earnings.

(b) Prepare an income statement for the month of May.

(c) Prepare a balance sheet at May 31, 2001.

Transcribed Image Text:

Accounts Assets Office Date Cash + Receivable + Supplies + Equipment Liabilities Stockholders' Equity Notes Accounts Common Retained Payable + Payable + Stock + Earnings