John Weiss recently started a lawn care service named The Grass Is Always Greener, Inc. The following
Question:
John Weiss recently started a lawn care service named “The Grass Is Always Greener, Inc.†The following transactions occurred during the company’s first month of business. Enter each of the following transactions into the accounting equation and identify an increase or decrease to assets, liabilities, shareholder’s equity, revenues, or expenses.
1. John contributed $16,500 of personal savings in exchange for common stock to start the business.
2. The company purchased $7,500 of inventory (plants and shrubs) from a gardening wholesaler in Kansas.
3. The company purchased three riding lawn mowers at a cost of $5,000 each.
4. The company paid rent expense of $500 the first month.
5. The company earned service revenue of $9,000 and sold the entire $7,500 of inventory it had purchased to customers for $13,250 cash.
All the transactions were for cash. Use the followingformat:
Common StockCommon stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Step by Step Answer:
Financial Accounting: A Business Process Approach
ISBN: 978-0136115274
3rd edition
Authors: Jane L. Reimers