The accountant for Compton Inc. has collected the following information: a. Compton purchased a tract of land

Question:

The accountant for Compton Inc. has collected the following information:
a. Compton purchased a tract of land from Jacobsen Real Estate for $860,000 to be used in its operations.
b. Compton issued 2,000 shares of its common stock to George Micros in exchange for $120,000 cash.
c. Compton purchased a John Deere backhoe for $42,000 on credit.
d. Michael Rotunno paid Compton $8,000 cash for services performed. The services had been performed by Compton several months ago for a total price of $10,000 of which Rotunno had previously paid $2,000.
e. Compton paid its monthly payroll by issuing checks totaling $38,000.
f. Compton declared and paid its annual dividend of $10,000 cash.

Required:
1. Prepare an analysis of the effects of these transactions on the accounting equation of the business. Use the format below.

The accountant for Compton Inc. has collected the following info

2. Indicate whether the transaction is a financing, investing, or operatingactivity.

Common Stock
Common 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...
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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