During 2007, its first year of operations as a delivery service, Cheng Corp. entered Determine effect of

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During 2007, its first year of operations as a delivery service, Cheng Corp. entered Determine effect of into the following transactions. transactions on basic accounting equation. Issued shares of common stock to investors in exchange for $110,000 in cash. (SO 1)

Borrowed $45,000 by issuing bonds.

Purchased delivery trucks for $60,000 cash.

Received $16,000 from customers for services provided.

Purchased supplies for $4,200 on account.

Paid rent of $5,600.

Performed services on account for $8,000.

Paid salaries of $28,000.

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 3-2 (page 107) as a model.

reaiOeESayeeNlSe, e Liabilities + Stockholders’ Equity Desh oat Property, Plant, _ Accounts Bonds Common Retained PP and Equipment Payable Payable Stock Earnings Assets Accounts Casket Receivable

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Financial Accounting Tools For Business Decision Making

ISBN: 9780471730514

4th Edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

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