The following events are for Smith Company for the year 2015

The following events are for Smith Company for the year 2015, the first year of operations. Assume that all transactions involve the receipt or payment of cash. 1) The business acquired $50,000 from stock issued to owners. 2) Creditors loaned the company $11,000. 3) The company provided services to its customers and received $60,000. 4) The company paid operating expenses amounting to $26,000. 5) The company purchased land for $25,000. 6) The company paid a dividend of $3,000 to its owners. Required a) Show the effects of the above transactions on the accounting equation (use appropriate element and account headings). For those events that affect retained earnings, indicate in a separate column the appropriate temporary account.

Solution

1) ABC Consulting INC

Income Statement for the year ended December, 31, 2015

ABC Consulting Inc

2) Statement of Changes in Share Holder\'s Equity

23160

Share Holder\'s Equity - $ 35,660

59780

	Assets	is equal to	Liabilities	Add	Shareholder\'s Equity
	Cash	Land	is equal to	Notes Payable	Add	Common Stock	Retained Earnings	Acct Title
Bal 1/1/15	0	0	is equal to	0	Add	0	0
Issues Stock	$ 50000	0	is equal to	0	Add	50000	0
Borrowed $	$ 11000	0	is equal to	$11000	Add	0	0
Provided SVC	$60000		is equal to	0	Add	$60000	0
Paid Exp	$(26000)		is equal to	0	Add		0
Purchased Land	$(25000)	$25000	is equal to	0	Add	0	0
Paid Div	$(3000)	0		0		0	$(3000)