Question

Problem 3-3

Nona Curry started her own consulting firm, Curry Consulting Inc., on May 1, 2017. 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 for the month in the County News.
9		Received $1,400 cash for services performed.
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 performed 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.

Show the effects of the above transactions on the accounting equation using the following format. Assume the note payable is to be repaid within the year. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.)

Prepare an income statement for the month of May 2017.

Prepare a retained earnings statement for the month of May 2017.

Prepare a classified balance sheet at May 31, 2017. (List current assets in order of liquidity)

Answer 1

Effect of transactions
Date	Description	Debit	Credit	Assets =	Liabilities	+Equity
May 1	Cash	$15,000		$15,000
	Common stock		$15,000			$15,000
May 2	Office rent expense	$600				($600)
	Cash		$600	($600)
May 3	Supplies	$500		$500
	Accounts payable		$500		$500
May 5	Advertise expense	$150				($150)
	Cash		$150	($150)
May 9	Cash	$1,400		$1,400
	Earned revenue		$1,400			$1,400
May 12	Dividend	$200				($200)
	Cash		$200	($200)
May 15	Accounts receivable	$4,200		$4,200
	Earned revenue		$4,200			$4,200
May 17	Salaries	$2,500				($2,500)
	Cash		$2,500	($2,500)
May 20	Accounts payable	$500			($500)
	Cash		$500	($500)
May 23	Cash	$1,200		$1,200
	Accounts receivable		$1,200	($1,200)
May 26	Cash	$5,000		$5,000
	Note payable		$5,000		$5,000
May 29	Office equipment	$2,000		$2,000
	Cash		$200	($200)
	Accounts payable		$1,800		$1,800
May 30	Utilities expense	$180				($180)
	Cash		$180	($180)
		$33,430	$33,430	$23,770	= $6,800 +	$16,970