Question & Answer: Exercise 3-3 During 2017,its first year of operations as a delivery service, Sheffield Corp. entered into the following transactions. 1……

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Exercise 3-3 During 2017,its first year of operations as a delivery service, Sheffield Corp. entered into the following transactions. 1. Issued shares of common stock to investors in exchange for $195,000 in cash. 2. Borrowed $46,000 by issuing bonds. 3. Purchased delivery trucks for $51,000 cash. 4. Received $18,000 from customers for services performed. 5. Purchased supplies for $3,600 on account. 6. Paid rent of $4,700. 7. Performed services on account for $11,700. 8. Paid salaries of $28,200. 9. Paid a dividend of $11,700 to shareholders.

Expert Answer

	Accounting equation is
	Assets = Liabilities + Capital


		Assets						Liabilities			Stockholders Equity		Reason for entry
Entry	Particulars	Cash	Accounts	Prepaid	Supplies	Prepaid	Delivery Truck	Bonds	Accounts	Unearned	Common	Retained
			Receivables	Rent		Salaries		Payable	Payable	Revenue	Stock	Earnings
1)	Issued shares	195000									195000		Common stock issued represents amount invested by stockholders
2)	Borrowed by issuing bonds	46000						46000					Amount borrowed is a liability
	Balance	241000	0	0	0	0	0	46000	0	0	195000	0
3)	Purchased Delivery Truck	-51000					51000						Truck purchased is an asset
	Balance	190000	0	0	0	0	51000	46000	0	0	195000	0
4)	Received From Customer	18000										18000	Services Performed represents amount earned by business
	Balance	208000	0	0	0	0	51000	46000	0	0	195000	18000
5)	Purchased Supplies	0			3600				3600				Supplies Purchased represents stock of supplies purchased
	Balance	208000	0	0	3600	0	51000	46000	3600	0	195000	18000
6)	Rent Paid	-4700		4700								0	Rent paid represents rent paid in advance
	Balance	203300	0	4700	3600	0	51000	46000	3600	0	195000	18000
7)	Services Performed	0	11700									11700	Services Performed represents amount earned by business
	Balance	203300	11700	4700	3600	0	51000	46000	3600	0	195000	29700
8)	Paid salaries	-28200				28200						0	Salaries paid represents expense paid in advance
	Balance	175100	11700	4700	3600	28200	51000	46000	3600	0	195000	29700
9)	Dividend Paid	-11700										-11700	Dividend represnts amount distributed to shareholders as profit
	Balance	163400	11700	4700	3600	28200	51000	46000	3600	0	195000	18000

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