Susan Taylor started her own consulting firm, Taylor Made Consulting Inc., on May 1, 2012. The following transactions occurred during the month of May.
May 1 Stockholders invested $15,000 cash in the business in exchange for common stock.
2 Paid $600 for office rent for the month.
3 Purchased $500 of supplies on account.
5 Paid $150 to advertise in the County News.
9 Received $1,400 cash for services provided.
12 Paid $200 cash dividend.
15 Performed $4,200 of services on account.
17 Paid $2,500 for employee salaries.
20 Paid for the supplies purchased on account on May 3.
23 Received a cash payment of $1,200 for services provided on account on May 15.
26 Borrowed $5,000 from the bank on a note payable.
29 Purchased office equipment for $2,000 paying $200 in cash and the balance on account.
30 Paid $180 for utilities.
Instructions
(a) Show the effects of the previous transactions on the accounting equation using the following format. Assume the note payable is to be repaid within the year.
| Assets | = | Liabilities | +Stockholders” Equity | ||||||||||||||||
| Date | Cash | + | Accounts | + | Supplies | + | Equipment | = | Notes | + | Accounts | + | Common | + | Revenues | – | Retained Earnings | – | Dividends |
Include margin explanations for any changes in Retained Earnings.
(b) Prepare an income statement for the month of May 2012.
(c) Prepare a classified balance sheet at May 31, 2012.
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