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Transaction Analysis and Business Activities

The accountant for Compton Inc. has collected the following information:

Compton purchased a tract of land from Jacobsen Real Estate for $$936,000$ cash.

Compton issued $2,000$ shares of its common stock to George Micros in exchange for $$110,000$ cash.

Compton purchased a John Deere tractor for $$70,000$ on credit.

Michael Rotunno paid Compton $$7,700$ cash for services performed. The services had been performed by Compton several months ago for a total price of $$11,900$ of which Rotunno had previously paid $$4,200.$

Compton paid its monthly payroll by issuing checks totaling $$31,650.$

Compton declared and paid its annual dividend of $$15,000$ cash.

Required:

$1.$ Prepare an analysis of the effects of these transactions on the accounting equation of the business. Use the format below. If an amount box does not require an entry, leave it blank. Enter decreases in account values as negative numbers. If the effect of a transaction is to increase AND decrease the same item $($i$.$e$.$ Asset, Liability$),$ enter $"0"$ since the net effect on the item is zero.

Stockholders' Equity

Assets $=$ Liabilities $+$ Contributed

Capital $+$ Retained

Earnings

$2.$ Indicate whether the transaction is a financing, investing, or operating activity.

a$.$ Compton purchased a tract of land from Jacobsen Real Estate for $$936,000$ cash.

b$.$ Compton issued $2,000$ shares of its common stock to George Micros in exchange for $$110,000$ cash.

c$.$ Compton purchased a John Deere tractor for $$70,000$ on credit.

d$.$ Michael Rotunno paid Compton $$7,700$ cash for services performed. The services had been performed by Compton several months ago for a total price of $$11,900$ of which Rotunno had previously paid $$4,200.$

e$.$ Compton paid its monthly payroll by issuing checks totaling $$31,650.$

f$.$ Compton declared and paid its annual dividend of $$15,000$ cash.