Reference no: EM132910524

Problem 1: Pink Floyd decides to open a pizza parlor near the local college campus that will operate as a corporation. Analyze the following transactions for the month of June in terms of their effect on the basic accounting equation. Record each transaction by increasing (+) or decreasing (-) the dollar amount of each item affected. Indicate the new balance of each item after a transaction is recorded. It is not necessary to identify the cause of changes in stockholders' equity.

(1) Pink Floyd invests $35,000 cash in exchange for common stock to start a pizza parlor business on June 1.

(2) Purchased equipment for $8,000 paying $2,000 in cash and the remainder due in 30 days.

(3) Purchased supplies for $1,500 cash.

(4) Received a bill from Campus News for $250 for advertising in the campus newspaper.

(5) Cash receipts from customers for pizza sales amounted to $1,200.

(6) Paid salaries of $300 to employees.

(7) Billed the Tiger Football Team $400 for pizzas ordered.

(8) Paid $250 to Campus News for advertising that was previously billed in Transaction 4.

(9) Pink Floyd was paid dividends of $1,000.

(10) Incurred utility expenses for month on account, $150.