Score: 13.76 out of 14 points (98.

29%)





[The following information applies to the questions displayed below.]
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 $43,000 cash in the company in exchange for common stock.
1 The company rented a furnished office and paid $2,200 cash for Mays rent.
3 The company purchased $1,930 of office equipment on credit.
5 The company paid $780 cash for this months cleaning services.
8 The company provided consulting services for a client and immediately collected $5,800 cash.
12 The company provided $3,000 of consulting services for a client on credit.
15 The company paid $740 cash for an assistants 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 $3,900 of consulting services on credit.
25 The company received $3,900 cash payment for the services provided on May 22.
26 The company paid $1,930 cash for the office equipment purchased on May 3.
27 The company purchased $80 of advertising in this months (May) local paper on credit; cash
payment is due J une 1.
28 The company paid $740 cash for an assistants salary for the second half of this month.
30 The company paid $300 cash for this months telephone bill.
30 The company paid $290 cash for this months utilities.
31 The company paid $1,900 cash for dividends.
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1.
award:
7 out of
7.00 points


Required:
2. Enter the amount of each transaction on individual items of the accounting equation. Do not
determine new account balances after each transaction. (Enter reductions to account balances
with a minus sign.)


$ $
$ $ $ $ $ $ $ $
Assets = Liabilities + Equity
Date Cash +
Accounts
Receivable
+
Office
Equipment
=
Accounts
Payable
+
Common
Stock
Dividends + Revenues Expenses
May 1 43,000 + + = + 43,000 +
1 (2,200) + + = + + 2,200
3 + + 1,930 = 1,930 + +
5 (780) + + = + + 780
8 5,800 + + = + + 5,800
12 + 3,000 + = + + 3,000
15 (740) + + = + + 740
20 3,000 + (3,000) + = + +
22 + 3,900 + = + + 3,900
25 3,900 + (3,900) + = + +
26 (1,930) + + = (1,930) + +
27 + + = 80 + + 80
28 (740) + + = + + 740
30 (300) + + = + + 300
30 (290) + + = + + 290
31 (1,900) + + = + 1,900 +
46,820 + 0 + 1,930 = 80 + 43,000 1,900 + 12,700 5,130
Worksheet
Learning Objective: 01-P1 Analyze business transactions using the
accounting equation.

Learning Objective: 01-C4 Explain generally accepted accounting
principles and define and apply several accounting principles.
Learning Objective: 01-P2 Identify and prepare basic financial
statements and explain how they interrelate.


Required:
2. Enter the amount of each transaction on individual items of the accounting equation. Do not
determine new account balances after each transaction. (Enter reductions to account balances
with a minus sign.)


$ $
$ $ $ $ $ $ $ $
Assets = Liabilities + Equity
Date Cash +
Accounts
Receivable
+
Office
Equipment
=
Accounts
Payable
+
Common
Stock
Dividends + Revenues Expenses
May 1 43,000 + + = + 43,000 +
1 (2,200) + + = + + 2,200
3 + + 1,930 = 1,930 + +
5 (780) + + = + + 780
8 5,800 + + = + + 5,800
12 + 3,000 + = + + 3,000
15 (740) + + = + + 740
20 3,000 + (3,000) + = + +
22 + 3,900 + = + + 3,900
25 3,900 + (3,900) + = + +
26 (1,930) + + = (1,930) + +
27 + + = 80 + + 80
28 (740) + + = + + 740
30 (300) + + = + + 300
30 (290) + + = + + 290
31 (1,900) + + = + 1,900 +
46,820 + 0 + 1,930 = 80 + 43,000 1,900 + 12,700 5,130

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2.
award:
6.76 out of
7.00 points


3.1 Prepare J . D. Simpson Company's income statement for May.


$
$
THE SIMPSON CO.
Income Statement
For Month Ended May 31
Revenues:
Consulting services revenue 12,700
Expenses:
Rent expense 2,200
Advertising expense 80
Cleaning expense 780
Salaries expense 1,480
Telephone expense 300
Utilities expense 290
Total expense 5,130
Net income (loss)
7,570

3.2 Prepare J . D. Simpson Company's statement of retained earnings for May.


$
$
THE SIMPSON CO.
Statement of Retained Earnings
For Month Ended May 31
Retained earnings, May 1 0
Add: Net income 7,570
7,570
Less: Cash dividends (1,900)
Retained earnings, May 31 5,670

3.3 Prepare J . D. Simpson Company's Balance Sheet for May 31.


$ $
$ $
THE SIMPSON CO.
Balance Sheet
May 31
Assets Liabilities
Cash 46,820 Accounts payable 80
Office equipment 1,930
Equity
Common stock 43,000
Retained earnings 5,670
Total equity 48,670
Total assets 48,750 Total liabilities and equity 48,750

3.4 Prepare J . D. Simpson Company's statement of cash flows for May. (Amounts to be deducted
should be indicated by a minus sign.)

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*Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted.
$
$
$
$
THE SIMPSON CO.
Statement of Cash Flows
For Month Ended May 31
Cash flows from operating activities:
Cash paid for cleaning (780)
Cash paid for rent (2,200)
Cash paid for telephone (300)
Cash paid for utilities (290)
Cash paid to employees (1,480)
Net cash provided by operating activities (5,050)
Cash flows from investing activities:
Purchase of equipment (1,930)
Net cash used in investing activities (1,930)
Cash flows from financing activities:
Investments by stockholder 43,000
Dividends to stockholder (1,900)

Net cash provided by financing activities 41,100
Net increase in cash 34,120
Cash balance, May 1 0
Cash balance, May 31 34,120
Worksheet
Learning Objective: 01-P1 Analyze business transactions using the
accounting equation.

Learning Objective: 01-C4 Explain generally accepted accounting
principles and define and apply several accounting principles.
Learning Objective: 01-P2 Identify and prepare basic financial
statements and explain how they interrelate.


3.1 Prepare J . D. Simpson Company's income statement for May.


$
$
THE SIMPSON CO.
Income Statement
For Month Ended May 31
Revenues:
Consulting services revenue 12,700
Expenses:
Rent expense 2,200
Salaries expense 1,480
Advertising expense 80
Cleaning expense 780
Telephone expense 300
Utilities expense 290
Total expense 5,130
Net income (loss) 7,570

3.2 Prepare J . D. Simpson Company's statement of retained earnings for May.


$
THE SIMPSON CO.
Statement of Retained Earnings
For Month Ended May 31
Retained earnings, May 1
Add: Net income 7,570
7,570
Less: Cash dividends 1,900
Retained earnings, May 31 5,670

3.3 Prepare J . D. Simpson Company's Balance Sheet for May 31.

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$ $
$ $
THE SIMPSON CO.
Balance Sheet
May 31
Assets Liabilities
Cash 46,820 Accounts payable 80
Office equipment 1,930
Equity
Common stock 43,000
Retained earnings 5,670
Total equity 48,670
Total assets 48,750 Total liabilities and equity 48,750

3.4 Prepare J . D. Simpson Company's statement of cash flows for May. (Amounts to be deducted
should be indicated by a minus sign.)


$
$
$
$
THE SIMPSON CO.
Statement of Cash Flows
For Month Ended May 31
Cash flows from operating activities:
Cash received from customers 12,700
Cash paid for rent (2,200)
Cash paid for cleaning (780)
Cash paid for telephone (300)
Cash paid for utilities (290)
Cash paid to employees (1,480)
Net cash provided by operating activities 7,650
Cash flows from investing activities:
Purchase of equipment (1,930)
Net cash used in investing activities (1,930)
Cash flows from financing activities:
Investments by stockholder 43,000
Dividends to stockholder (1,900)

Net cash provided by financing activities 41,100
Net increase in cash 46,820
Cash balance, May 1
Cash balance, May 31 46,820

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