An analysis of the transactions of Pickett Shipping Services for the month of May appears below. Line 1 summarizes Pickett's accounting equation data as of May 1; lines 2-10 represent the transactions for the month of May:

Required

a. Show that assets equal liabilities plus stockholders' equity as of May 1.

b. Describe the apparent transaction indicated by each line. (For example, line 2: Borrowed \(\$ 3,500\), giving a note payable.) If any line could reasonably represent more than one type of transaction, describe each type. Transaction (8) does not affect net income.

c. Show that assets equal liabilities plus stockholders' equity as of May 31.

Transcribed Image Text:

Accounts Notes Cash Receivable + Supplies + Equipment = Payable + Payable + (1) (2) $3,500+ +3,500 Common Retained Stock + Earnings $6,700 + $2,100 + $9,000 = $ 700 +$6,000 +$4,400 + $10,200 Accounts +3,500 (3) +5,200 -5,200 (4) +1,500 +1,500 (5) +4,600 (6) -300 -300 (7) +1,900 (8) -800 (9) -750 (10) -2,500 +750 +4,600 +1,900 -800 -2,500