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Expert-verified Found in: Page 19 ### Horngren'S Financial And Managerial Accounting

Book edition 6th
Author(s) Tracie L. Miller-Nobles, Brenda L. Mattison
Pages 992 pages
ISBN 9780134486833

# Using the information provided, analyze the effects of Lawlor Lawn Service’s transactions on the accounting equation. May 1 Received $1,700 and issued common stock. May 3 Purchased a mower on account,$1,440. May 5 Performed lawn services for client on account, $200. May 17 Paid$60 cash for gas used in mower. May 28 Paid cash dividends of $300.  Assets = Liabilities + EQUITY Contributed Capital + Retained Earnings Cash + Accounts Receivable + Equipment = Accounts Payable + Common Stock - Dividends + Revenues - Expenses May 1 +1,700 = +1,700 Bal.$1,700 = $1,700 May 3 +1,440 = +1,440 Bal.$1,700 + $1.440 =$1,440 + $1,700 May 5. +200 = +200 Bal.$1,700 + $200 +$1,440 = $1,440$1,700 + $200 May 17 -60 = -60 Bal.$1,640 + $200 +$1,440 = $1,440 +$1,700 + $200 -$60 May 28 -300 = -300 Bal. $1,340 +$200 + $1,440 =$1,440 + $1,700 -$300 + $200 -$60 $2,980$2980
See the step by step solution

## Step 1: Explanation of accounting equation

The accounting equation is the basic tool of accounting, which measures the entity's resources. As per the accounting equation, assets are equal to the sum of liabilities and equity.

## Step 2: Effect of the transactions

Transaction on May 1 will increase the cash under the asset and common stock under equity by $1,700. Transaction on May 3 will increase the equipment under the asset and accounts payable under liabilities by$1,440.

Transaction on May 5 will increase accounts receivable under asset and service revenue under equity.

Transaction on May 17 will decrease cash under the asset and retained earnings under equity by $60. Transaction on May 28 will decrease cash under the asset and retained earnings under equity by$300. ### Want to see more solutions like these? 