During 2017, its fi rst year of operations as a delivery service, Persimmon Corp. entered into the
Question:
During 2017, its fi rst year of operations as a delivery service, Persimmon Corp.
entered into the following transactions. LO9 1. Issued shares of common stock to investors in exchange for $100,000 in cash.
2. Borrowed $45,000 by issuing bonds.
3. Purchased delivery trucks for $60,000 cash.
4. Received $16,000 from customers for services performed.
5. Purchased supplies for $4,700 on account.
6. Paid rent of $5,200.
7. Performed services on account for $10,000.
8. Paid salaries of $28,000.
9. 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 3-3 (page 99) as a model.
Determine effect of transactions on basic accounting equation.
(LO 1), AP Assets = Liabilities + Stockholders’ Equity Accounts Equip- Accounts Bonds Common Retained Earnings Cash + Receivable + Supplies + ment = Payable + Payable + Stock + Revenues − Expenses − Dividends
Step by Step Answer:
Financial Accounting
ISBN: 9781118953907
8th Edition
Authors: Paul D Kimmel, Jerry J Weygandt, Donald E Kieso