Question

During 2022, its first year of operations as a delivery service, Pronghorn Corp entered into the following transactions.

1.		Issued shares of common stock to investors in exchange for $198,000 in cash.
2.		Borrowed $48,000 by issuing bonds.
3.		Purchased delivery trucks for $61,000 cash.
4.		Received $14,000 from customers for services performed.
5.		Purchased supplies for $3,900 on account.
6.		Paid rent of $5,800.
7.		Performed services on account for $10,700.
8.		Paid salaries of $30,000.
9.		Paid a dividend of $11,900 to shareholders.

+ - 0 X Ch 3 required HW → C X Search Trathook Solutions x Get Homework Help With Chegs x ear.wileyplus.com/courses/30414/assignments/3011495 + l WP Using the following Labular analysis, show the effect of each transaction on the alluunling equation. Pul explanations for changes to Slockhollers' Equity in the far righl Lulun. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity place a negative sign for parentheses) in front of the amount entered for the particular Asset, Llability or Equity item that was reduced, see Illustration 3-4 for example.) Assets Liabilities Account Bonds Accounts Receivable Cash Accounts Payable Common Stock Supplies + Equipment Payable Dashboard Courses Calendar ? Get HELP eTextbook and Media Attempts: 0 of 3 used Save for later Submit Answer Send to Gradebook < Prev Next > Previous - Type here to search A115202

Answer 1

Effect of each transation in the following Tabular Analysis

Asset = Liabilities

Transation	Cash	+Accounts Receivable	+ Supplies	+Equipment	=Accounts Payable	+Notes Payable	+Common Stock
1	$198000						$ 198,000
2	$ 48,000					$48,000
3	$-61,000			$61,000
4	$14,000	$ - 14,000
5			$3,900		$3,900
6	$ - 5,800						$ - 5,800
7		$10,700					$ 10,700
8	$ -30,000						$ - 30,000
9	- 11,900						$ - 11,900

In Tubular Analysis of each transation we can use this equation;

Cash + Other Current Assets + Long term Asset = Current Liabilities + Common Stock

Common Stock includes equity share capital preferences shares, retained earnings adjested for net income earned and divident paid.

Here we can understand each transation and it's effets.

1. Issued shares of common stock to investors in exchange for $ 198,000

## Cash is debited and common stock is credited for share issued.

2. Borrowed $ 48,000 by issuing a note.

## Cash account is debited and Notes Payable is credited for borrowings is made.

3. Purchased Delivery Trucks for $ 61,000 cash.

## Equipment account is debited and Cash account is credited for purchase of delivary trucks.

4. Received $ 14,000 from customers for services performed.

## Cash account is debited and accounts receivable is credited for the cash received from customers.

5. Purchased supplies for $ 3,900 on account.

## supplies inventory account is debited and accounts payable is credited since no cash is paid.

6. Paid Rent of $ 5,800

## Rent expenses is debited and Cash accoun is credited.

Expenses are deducted from income , to get Net income. Net Income is transferred to retained earning under equity section. So expenses reduces the stockholders equity.

7. Performed services on account for $ 10,700

# Accounts Receivable is debited and Service Revenue is Credited , no cash is received. It increases the common stock.

8. Paid Salaries of $ 30,000

## salary account is debited and Cash account is credited.

Expenses reduces the stockholders equity.

9.Paid Divident $11, 900 to shareholders.

## Retained Earning account is debited and Cash is credited .divident reduces shareholders equity.