During 2012, its first year of operations as a delivery service, Underwood Corp. entered into the following transactions.
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 provided.
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 110) as a model.
| Assets | = | Liabilities | +Stockholders” Equity | |||||||||||||||
| Cash | + | Accounts | + | Supplies | + | Equipment | = | Accounts | + | Bonds | + | Common | + | Revenues | – | Retained Earnings | – | Dividends |
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