Selected Transactions for Stockton Corporation During Its First Month in Business

question 167

Essay

Selected transactions for Stockton Corporation during its first month in business are presented below:
Sept. 1 Issued common stock in exchange for $30,000 cash received from investors.
5 Purchased equipment for $20,000, paying $2,000 in cash and the balance on account.
25 Paid $6,000 cash on balance owed for equipment.
30 Paid $1,000 cash dividend.
Stockton's chart of accounts shows: Cash, Equipment, Accounts Payable, Common Stock, and Dividends.
Instructions
(a) Prepare a tabular analysis of the September transactions. The column headings should be: Cash + Equipment = Accounts Payable + Stockholders' Equity. For transactions affecting stockholders' equity, provide explanations in the right margin.
(b) Journalize the transactions. Do not provide explanations.
(c) Post the transactions to T-accounts.

---

Definitions:

Equity

The value of an ownership interest in property, including shareholders' equity in a company, which represents assets minus liabilities.

Top Management

The highest level of managers in an organization, including positions like CEO and CFO, responsible for setting strategic goals and company policies.

Board Of Directors

The governing body of a corporation, elected by common stockholders.

Acquirer's Stockholders

The shareholders of a company that is purchasing another company or its assets through a merger or acquisition.