Description
Purpose of Assignment
The purpose of this assignment is to help you become familiar with examining transactions and how it affects the balance sheet.
Assignment Steps
Resources: Financial Accounting: Tools for Business Decision Making
Write a minimum 150-word response to each of the following scenarios from Exercise E3-1 in Financial Accounting (p. 132) describing the effect of each transaction on assets, liabilities, and stockholder's equity:
- Selected transactions for Thyme Advertising Company, Inc.
- Issued common stock to investors in exchange for cash received from investors.
- Paid monthly rent.
- Received cash from customers when service was performed.
- Billed customers for services performed.
- Paid dividend to stockholders.
- Incurred advertising expense on account.
- Received cash from customers billed in (4).
- Purchased additional equipment for cash.
- Purchased equipment on account.
Use the Excel® spreadsheet to record your answers and submit with your responses.
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Explanation & Answer
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Issued common stock to investors in exchange for cash received from investors.
Paid monthly rent.
Received cash from customers when service was performed.
Billed customers for services performed.
Paid dividend to stockholders.
Incurred advertising expense on account
Received cash from customers billed in (4).
Purchased additional equipment for cash.
Purchased equipment on account.
Reference
Wainwright, S. (2012). Principles of accounting. Volume I. San Diego, CA
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ASSETS
The transaction leads to increase in the assets of the company as increase in cash leads to increase in the assets of the company. Ca
The paying of the monthly rent leads to the reduction of the assets as it is considered a current liability meaning and this leads to the n
increase in cash leads to improvement in the company assets and this is because there is reduction in the liabilities of the company th
Billing is payment for a service that the company renders and this means that there is increase in assets before as the service is accru
The paying of dividends leads to the decrease of the company assets and this is where there is reduction in the cash at bank and in h
Advertising expenses is a liability to the company and this results to the decrease in the company assets as the company has to incur
The receiving of the cash increases the assets that is the cash in hand as the customers pays . There is also a decrease of the assets
The purchase of equipment leads to increase in the assets of the company as its classified under the fixed assets. It is important as it
The purchase of the equipment using the account leads to increase in the assets classfied under the fixed assets. It creates the need
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LIABILITIES
The liabilities of the company decrease as there is conversion of the common stock to cash increasing the assets and reducing the lia
Accounts payable are liabilities in the company and rent falls in the category that means paying of rent leads to increase in the liabilitie
There is decrease in the liabilities and this are the debtors that owe the company money. The decrease leads to the improvement of th
There is reduction in the liabilities for the company where there is billing as it reduces the liabilities that the company incurs while offer
Paying of dividends is a liability for the company as it decreases the assets that the company holds and this means that it is an expens
Advertising is a liability and this increases the company liability to the company. it is important to consider the cost of advertising for th
The liabiities to the company reduces as there is increase in the assets of the company and this leads to improvement in the performa
The liability of the company increases where the equipment is purchased under loan and this is considered an expense to the compan
The liabilities of the company decrease as the money used is the account and this lea...
