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Homework answers / question archive / Selected transactions for Thyme Advertising Company, Inc
Selected transactions for Thyme Advertising Company, Inc. are listed here.
1. Issued common stock to investors in exchange for cash received from investors.
2. Paid monthly rent.
3. Received cash from customers when service was performed.
4. Billed customers for services performed.
5. Paid dividend to stockholders.
6. Incurred advertising expense on the account.
7. Received cash from customers billed in (4).
8. Purchased additional equipment for cash.
9. Purchased equipment on account.
Instructions:
Describe the effect of each transaction on assets, liabilities, and stockholders' equity.
1. Issued common stock to investors in exchange for cash received from investors. Increase in assets (cash), increase in stockholders' equity (common stock).
2. Paid monthly rent. Decrease in assets (cash), decrease in stockholders' equity (retained earnings).
3. Received cash from customers when service was performed. Increase in assets (accounts receivable), increase in stockholders' equity (retained earnings).
4. Billed customers for services performed. Increase in assets (accounts receivable), increase in stockholders' equity (retained earnings).
5. Paid dividend to stockholders. Decrease in assets (cash), decrease in stockholders' equity (retained earnings).
6. Incurred advertising expense on the account. Increase in liabilities (advertising payable), decrease in stockholders' equity (retained earnings).
7. Received cash from customers billed in (4). No effect in assets (cash and accounts receivable).
8. Purchased additional equipment for cash. No effect in assets (cash and equipment).
9. Purchased equipment on account. Increase in assets (equipment), increase in liabilities (accounts payable).