Problem A

Lakewood Personal Finance Company, which provides financial advisory services, engaged in the following transactions during

May 2010:

May 1Received USD 300,000 cash for shares of capital stock issued when company was organized.

2 The company borrowed USD 40,000 from the bank on a note.

7 The company bought USD 182,400 of computer equipment for cash.

11 Cash received for services performed to date was USD 15,200.

14 Services performed for a customer who agreed to pay within a month were USD 10,000.

15 Employee wages were paid, USD 13,200.

19 The company paid USD 14,000 on the note to the bank.

31 Interest paid to the bank for May was USD 140. (Interest is an expense, which reduces retained earnings.)

31 The customer of May 14 paid USD 3,200 of the amount owed to the company.

31 An order was received from a customer for services to be rendered next week, which will be billed at USD 12,000.

Prepare a summary of transactions (see Part A of Exhibit 4). Use money columns headed Cash, Accounts Receivable, Equipment, Notes Payable, Capital Stock, and Retained Earnings. Determine balances after each transaction to show that the accounting equation balances