Question

Statement of Cash Flows & Select Fees earned Investment Issued note payable Paid dividends Paid interest expense Paid salary expense Purchased land Rent expense Select d. Balances

Answer 1

Part 1)

The effect of each transaction and balances after each transaction is determined as below:

Statement of Cash flows	Balance Sheet									Income Statement
	Assets			=	Liabilities	+	Stockholder's Equity
	Cash	+	Land	=	Notes Payable	+	Common Stock	+	Retained Earnings
a. Issued Common Stock	49,500						49,500
b. Issued Note Payable	25,000				25,000
Balances	74,500				25,000		49,500
c. Fees Earned	27,000								27,000	c.
Balances	101,500				25,000		49,500		27,000
d. Rent Expense	-2,800								-2,800	d.
Balances	98,700				25,000		49,500		24,200
e. Paid Expenses	-2,800								-2,800	e.
Balances	95,900				25,000		49,500		21,400
f. Paid Salary Expense	-4,400								-4,400	f.
Balances	91,500				25,000		49,500		17,000
g. Paid Interest Expense	-100								-100	g.
Balances	91,400				25,000		49,500		16,900
h. Purchased Land	-60,000		60,000
Balances	31,400		60,000		25,000		49,500		16,900
i. Paid Dividends	-4,300								-4,300
Balances, March 31	$27,100		$60,000		$25,000		$49,500		$12,600

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Part 2)

Decrease assets, decrease stockholder's equity is the correct option for Part 2.

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Explanation:

Payment of utility expense would result in a decrease in cash balance (which is an asset). It would also be reported as an expense in the income statement, causing a reduction in the overall net income. A decrease in net income would result in a lower value being transferred to retained earnings (which is a part of stockholder's equity) at the end of the year.

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Part 3)

The income statement is given as below:

Bride Insurance Co.
Income Statement
For the Month Ending March 31, 20Y5
Revenues:
Fees Earned		27,000
Expenses:
Rent Expense	-2,800
Auto Expense	-1,900
Miscellaneous Expense	-900
Salary Expense	-4,400
Interest Expense	-100
Total Expenses		-10,100
Net Income		$16,900

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Part 4)

The balance sheet is prepared as follows:

Bride Insurance Co.
Balance Sheet
March 31, 20Y5
Assets
Cash		27,100
Land		60,000
Total Assets		$87,100
Liabilities
Notes Payable		25,000
Stockholder's Equity
Common Stock	49,500
Retained Earnings	12,600
Total Stockholder's Equity		62,100
Total Liabilities and Stockholder's Equity		$87,100

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Part 5)

The statement of cash flows is given as follows:

Bride Insurance Co.
Statement of Cash Flows
For the Month Ending July 31, 20Y5
Cash Flows from Operating Activities:
Cash Receipts from Operating Activities	27,000
Cash Payments from Operating Activities	-10,100
Net Cash Flow from Operating Activities		$16,900
Cash Flow Used for Investing Activities
Cash Payment for Land		-$60,000
Cash Flows from Financing Activities:
Cash Receipts from Issuing Capital Stock	49,500
Cash Receipts from Issuing Notes Payable	25,000
Cash Payments for Dividends	-4,300
Net Cash Flow from Financing Activities		$70,200
Net Increase in Cash during March		27,100
Cash as of March 1, 2015		0
Cash as of March 31, 2015		$27,100

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Part 6)

The statement of retained earnings is given as below:

Bride Insurance Co.
Retained Earnings Statement
For the Month Ending March 31, 2015
Retained Earnings, March 1, 20Y5	0
Net Income	16,900
Dividends	-4,300
Retained Earnings, March 31, 20Y5	$12,600