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Chapter 1: Q4TI (page 19)

Using the information provided, analyze the effects of Lawlor Lawn Service鈥檚 transactions on the accounting equation. May 1 Received \(1,700 and issued common stock. May 3 Purchased a mower on account, \)1,440. May 5 Performed lawn services for client on account, \(200. May 17 Paid \)60 cash for gas used in mower. May 28 Paid cash dividends of $300.

Short Answer

Expert verified


Assets		=Liabilities
+

EQUITY
Contributed Capital
+Retained Earnings
Cash
+
Accounts Receivable
+
Equipment
=
Accounts Payable
+
Common Stock
-
Dividends
+
Revenues
-Expenses

May 1

+1,700





=



+1,700







Bal.

$1,700





=



$1,700







May 3





+1,440

=

+1,440









Bal.

$1,700



+

$1.440

=

$1,440

+

$1,700







May 5.



+200



=







+200



Bal.

$1,700

+

$200

+

$1,440

=

$1,440


$1,700



+

$200



May 17

-60





=







-60

Bal.

$1,640

+

$200

+

$1,440

=

$1,440

+

$1,700



+

$200

-

$60

May 28

-300





=





-300





Bal.

$1,340

+

$200

+

$1,440

=

$1,440

+

$1,700

-

$300

+

$200

-

$60


$2,980

$2980

Step by step solution

01

Explanation of accounting equation

The accounting equation is the basic tool of accounting, which measures the entity's resources. As per the accounting equation, assets are equal to the sum of liabilities and equity.

02

Effect of the transactions

Transaction on May 1 will increase the cash under the asset and common stock under equity by $1,700.

Transaction on May 3 will increase the equipment under the asset and accounts payable under liabilities by $1,440.

Transaction on May 5 will increase accounts receivable under asset and service revenue under equity.

Transaction on May 17 will decrease cash under the asset and retained earnings under equity by $60.

Transaction on May 28 will decrease cash under the asset and retained earnings under equity by $300.

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Most popular questions from this chapter

The records of Felix Company show the following at December 31, 2018:

Assets & Liabilities: Equity:

Beginning: Common Stock \( 11,000

Assets \) 67,000 Dividends 8,000

Liabilities 11,000 Revenues 205,000

Ending: Expenses ?

Assets $ 46,000 Retained Earnings, January 1, 2018 45,000

Liabilities 34,000

Requirements 1. Compute the missing amount for Felix Company. You will need to determine Retained Earnings, December 31, 2018, and total stockholders鈥� equity, December 31, 2018. 2. Did Felix earn a net income or suffer a net loss for the year? Compute the amount.

Identifying accounts Consider the following accounts: a. Accounts Payable b. Cash c. Common Stock d. Accounts Receivable e. Rent Expense f. Service Revenue g. Office Supplies h. Dividends i. Land j. Salaries Expense Identify each account as Asset, Liability, or Equity

Allen Shonton recently opened his own accounting firm on April 1, which he operates as a corporation. The name of the new entity is Allen Shonton, CPA. Shonton experienced the following events during the organizing phase of the new business and its first month of operations in 2018: Apr. 5 Shonton deposited \(75,000 in a new business bank account titled Allen Shonton, CPA. The business issued common stock to Shonton. 6 Paid \)300 cash for letterhead stationery for new office. 7 Purchased office furniture for the office on account, \(9,500. 10 Consulted with tax client and received \)4,000 for services rendered. 11 Paid utilities, \(190. 12 Finished tax hearings on behalf of a client and submitted a bill for accounting services, \)20,000. 18 Paid office rent, \(750. 25 Received amount due from client that was billed on April 12. 27 Paid full amount of accounts payable created on April 7. 30 Cash dividends of \)3,500 were paid to stockholders. Requirements: Prepare the following financial statements: b. Statement of retained earnings.

Identifying users of accounting information For each user of accounting information, identify if the user would use financial accounting or managerial accounting. a. investor e. controller b. banker f. stockholder c. IRS g. human resources director d. manager of the business h. creditor

Polk Street Homes had the following cash transactions for the month ended July 31, 2018.

Cash receipts:

Collections from customers $ 25,000

Issued common stock 13,000

Cash payments:

Rent 500

Utilities 2,000

Salaries 1,500

Purchase of equipment 25,000

Payment of cash dividends 4,000

Cash balance, July 1, 2018 14,000

Cash balance, July 31, 2018 19,000

Prepare the statement of cash flows for Polk Street Homes for the month ended

July 31, 2018.
See all solutions

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