Description
APA Style, No Plagiarism, No Grammar Error.
Write a minimum 150-word response to each of the following scenarios 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 in MS Word in APA Style.
Explanation & Answer
Attached.
Issued common stock to investors in exchange for cash received from investors.
Assets
Cash (Decreased)
Journal Entries
Advertisement expense d
Assets
Cash (Increased)
Journal Entries
cash debited and accoun
Assets
Cash (Decreased) Equipm
Journal Entries
Equipment debited and c
Assets
Equipment(Increased)
Recording transactions
0
a) issuing common stock in exchange for cas
Assets
=
cash (increased)
Assets
b) cash payment of rent
=
Cash (Decreased)
Journal Entries
Rent is Debited and cash account credited
c) Cash Received from
Assets
=
Cash (Increased)
journal entries
cash is debited and revenue is credited
d) services billed
Assets
=
Account Receivables (Increased)
Journal Entries For these Transaction Debit
Account receivable is debited and revenue account credited
e) payment of dividends
Assets
Cash (Decreased)
Journal Entries
Dividends debited and cash credited
=
f)advertising expense
Assets
=
Cash (Decreased)
Journal Entries
Advertisement expense debited and expense payable credited
g) cash received
Assets
Cash (Increased)
=
account receivable (dec
Journal Entries
cash debited and account receivable credited
Assets
Cash (Decreased) Equipment(Increased)
h) purchase of equipment
=
Journal Entries
Equipment debited and cash credited
Assets
Equipment(Increased)
Journal Entries For these Transaction Debit to
Equipment debited and account payable credited
i) equipment purchase
=
mmon stock in exchange for cash
Owner Equity
Liabilities
+
Shareholder Equity
(Increased)
no effect
ent of rent
Liabilities
+
Owners Equity
Expense (Decrease)
no effect
c) Cash Received from provision of services
Liabilities
+
Owners Equity
service revenues (increased)
no effec t
d) services billed
Liabilities
+
Owners Equity
Service revenues (Increased)
no effect
e) payment of dividends
Liabilities
no effect
+
Owners Equity
Retained Earnings
(Decreased)
f)advertising expense
Liabilities
+
Owners Equity
Retained Earnings
(Decreased)
no effect
Liabilities
+
account receivable (decreased)
Owners Equity
no effect
ent
Liabilities
no effect
+
Owners Equity
no effect
se
Liabilities
+
accounts payable (Increased)
Owners Equity
no effect
Attached.
Name
Course
Institution
Instructor
Date
Recording transactions
1. Common stock usually represents the ownership of an individual in a company. The main
reason why the firms issue common stock is to enable to raise working capital so that it can meet
its expenses as well as capital expenditures like purchasing equipment and machinery. When
common stock is issued by the company, it is usually diluted. Therefore, the problem of these
shares increase the corporations' current assets, the shareholder's equity in the company also
increases
. They only have an impact on the balance sheet and not the income statement
because they are items of the balance sheet. When investors invest in the common stock of a
company, they get returns in the form of capital gains which are obtained from the resale of the
stock or in the form of dividends. The price of common stock in most cases is determined by the
market values of the shares, and if they are sold at a higher price than the par value, they are sold
at a premium. If the price is less than the face value, then, they are sold at a discount.
2. When a firm pays its monthly rent, it incurs expenses. It is usually paid by the company to the
landlord for their use of the property. Rent is an item on the income statement of the company as
it is an expense incurred by it. When rent is paid, the amount of cash the company has reduces
while the firm’s expenses increase. Rent expense therefore results in decrease of the income of
the corporation, retained earnings as well as current assets. The company agrees with the
landlord, and it is in this agreement, where the payment terms are stipulated. In the cash flow
statement, rent is recorded under operation activities. Payment of rent repre...