J. D. Simpson started The Simpson Co., a new business that began operations on May 1. The Simpson Co. completed the following transactions during its first month of operations.

May 1 J. D. Simpson invested $60,000 cash in the company.

1 The company rented a furnished office and paid $3,200 cash for May’s rent.

3 The company purchased $1,680 of office equipment on credit.

5 The company paid $800 cash for this month’s cleaning services.

8 The company provided consulting services for a client and immediately collected $4,600 cash.

12 The company provided $3,000 of consulting services for a client on credit.

15 The company paid $850 cash for an assistant’s salary for the first half of this month.

20 The company received $3,000 cash payment for the services provided on May 12.

22 The company provided $2,800 of consulting services on credit.

25 The company received $2,800 cash payment for the services provided on May 22.

26 The company paid $1,680 cash for the office equipment purchased on May 3.

27 The company purchased $60 of advertising in this month’s (May) local paper on credit; cash payment is due June 1.

28 The company paid $850 cash for an assistant’s salary for the second half of this month.

30 The company paid $200 cash for this month’s telephone bill.

30 The company paid $480 cash for this month’s utilities.

31 J. D. Simpson withdrew $1,200 cash from the company for personal use.

Required

1. Arrange the following asset, liability, and equity titles in a table like Exhibit: Cash; Accounts Receivable; Office Equipment; Accounts Payable; J. D. Simpson, Capital; J. D. Simpson, Withdrawals; Revenues; and Expenses.

2. Show effects of the transactions on the accounts of the accounting equation by recording increases and decreases in the appropriate columns. Do not determine new account balances after each transaction. Determine the final total for each account and verify that the equation is in balance.

3. Prepare an income statement for May, a statement of owner’s equity for May, a May 31 balance sheet, and a statement of cash flows for May.