TRANSACTION ANALYSIS AND BUSINESS ACTIVITIES The accountant for Compton Inc. has collected the following information:

a. Compton purchased a tract of land from Jacobsen Real Estate for $860,000 to be used in its operations.

b. Compton issued 2,000 shares of its common stock to George Micros in exchange for $120,000 cash.

c. Compton purchased a John Deere backhoe for $42,000 on credit.

d. Michael Rotunno paid Compton $8,000 cash for services performed. The services had been performed by Compton several months ago for a total price of $10,000 of which Rotunno had previously paid $2,000.

e. Compton paid its monthly payroll by issuing checks totaling $38,000.

f. Compton declared and paid its annual dividend of $10,000 cash.
Required:
. Prepare an analysis of the effects of these transactions on the accounting equation of the business. Use the format below.
Assets ¼ Liabilities þ Stockholders’ Equity Contributed Capital Retained Earnings . Indicate whether the transaction is a financing, investing, or operating activity.
Exercise