Question

Jo Birde established an insurance agency on March 1, 20Y5, and completed the following transactions during March:

1. Opened a business bank account in the name of Birde Insurance Inc., with a deposit of $50,500 in exchange for capital stock.
2. Borrowed $24,500 by issuing a note payable.
3. Received cash from fees earned, $28,000.
4. Paid rent on office and equipment for the month, $3,000.
5. Paid automobile expense for the month, $1,800, and miscellaneous expense, $800.
6. Paid office salaries, $4,400.
7. Paid interest on the note payable, $110.
8. Purchased land as a future building site, $54,500.
9. Paid dividends, $3,500.

Instructions:

1. Indicate the effect of each transaction and the balances after each transaction, using the integrated financial statement framework. If an amount box does not require an entry, leave it blank. Enter account decreases and net cash outflows as negative amounts.

Statement of Cash Flows Balance Sheet Income Statement Assets = Liabilities + Stockholders' Equity CASH + LAND = Notes Payable + Capital Stock + SelectNotes PayableRetained EarningsCorrect 5 of Item 1 a. Investment b. Issued note payablePaid     Balances c. Fees earnedI c.    Balances d. Rent expense d.    Balances e. Paid expenses e.    Balances f.Paid salary expense f.    Balances g. Paid interest expense g.    Balances h. Purchased land    Balances i. Paid dividends     Balances, March 31 Statement of Cash Flows Income Statement a. SelectFinancingOperatingInvestingNo effectCorrect 100 of Item 1 c. SelectFees earnedRent expenseAuto expenseMiscellaneous expenseSalary expenseInterest expenseCorrect 102 of Item 1 b. SelectFinancingOperatingInvestingNo effectCorrect 104 of Item 1 d. SelectFees earnedRent expenseAuto expenseMiscellaneous expenseSalary expenseInterest expenseCorrect 106 of Item 1 c. SelectFinancingOperatingInvestingNo effectCorrect 108 of Item 1 e. SelectFees earnedRent expenseAuto expenseCashSalary expenseInterest expenseCorrect 110 of Item 1 d. SelectFinancingOperatingInvestingNo effectCorrect 112 of Item 1 e. SelectFees earnedRent expenseCashMiscellaneous expenseSalary expenseInterest expenseCorrect 114 of Item 1 e. SelectFinancingOperatingInvestingNo effectCorrect 116 of Item 1 f. SelectFees earnedRent expenseAuto expenseMiscellaneous expenseSalary expenseInterest expenseCorrect 118 of Item 1 f. SelectFinancingOperatingInvestingNo effectCorrect 120 of Item 1 g. SelectFees earnedRent expenseAuto expenseMiscellaneous expenseSalary expenseInterest expenseCorrect 122 of Item 1 g. SelectFinancingOperatingInvestingNo effectCorrect 124 of Item 1      SelectNet incomeNet lossCorrect 126 of Item 1 h. SelectFinancingOperatingInvestingNo effectCorrect 128 of Item 1 i. SelectFinancingOperatingInvestingNo effectCorrect 130 of Item 1     SelectIncrease in cashDecrease in cashNo effectCorrect 132 of Item 1

2. Which of the following shows the correct effect on the accounting equation for a utility expense that is paid when billed?
SelectIncrease assets; increase stockholders' equityDecrease assets; decrease stockholders' equityDecrease assets; decrease liabilitiesIncrease liabilities; decrease stockholders' equity

Answer 1