Reference no: EM132847816

Question - Assume Downer was organized on May 1, to compete with Despair, Inc. a company that sells demotivational posters and office products. The following events occurred during the first month of Downer operations.

-Received $66,000 cash from the investors who organized Downer Corporation

-Borrowed $23,000 cash and signed a note due in two years

-Ordered computer equipment costing $17,500

-Purchased $10,500 in equipment, paying $2,600 in cash and signing a six-month note for the balance

-Received the equipment ordered in (c), paid for half of it, and put the rest on account

Required -

1. For each of the events (a) through (e), perform transaction analysis and indicate the amount of effect on the accounting equation.

2. Prepare journal entries for each transaction.

3. Make a classified balance sheet at May 31. Include retained earnings with a balance of zero.