Wong Computer Corporation had the following opening account balances at the end of April: Cash $5,000; Accounts

Question:

Wong Computer Corporation had the following opening account balances at the end of April: Cash $5,000; Accounts Receivable $6,000; Accounts Payable $2,000; Common Shares $5,000; and Retained Earnings $4,000. It entered into the following transactions during the month of May:

1. Purchased equipment on account for $8,000.

2. Paid $1,600 for rent for the month of May.

3. Provided computer services for $3,800 on account.

4. Paid Ontario Hydro $300 cash for utilities used in May.

5. Borrowed $20,000 from the bank.

6. Paid supplier for equipment purchased in transaction 1.

7. Purchased a one-year accident insurance policy for $500 cash.

8. Received $3,000 cash in partial payment of the account owed in transaction 3.

9. Declared and paid $500 of dividends to shareholders.

10. Paid income tax of $250 for the month.

Instructions

Prepare an equation analysis of the effects of the opening balances and above transactions on the expanded accounting equation, similar to those shown in Illustrations 3.3 and 3.4.

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