Textbook Problem

Transactions

Interstate Delivery Service is owned and operated by Katie Wyer. The following selected transactions were completed by Interstate Delivery Service during May:

1. 1. Received cash in exchange for common stock, $18,000.
2. 2. Paid advertising expense, $4,850.
3. 3. Purchased supplies on account, $2,100.
4. 4. Billed customers for delivery services on account, $14,700.
5. 5. Received cash from customers on account, $8,200.

Indicate the effect of each transaction on the following accounting equation elements: Assets, Liabilities, Common Stock, Dividends, Revenue, and Expense. To illustrate, the answer to (1) follows:

(1) Asset (Cash) increases by $18,000: Common Stock increases by $ 18,000.