Analyzing Transactions Using the Financial Statement Effects Template
Hanlon Advertising Company began the current month with the following balance sheet.
| Cash |
$ 80,000 |
Liabilities |
$ 70,000 |
| Noncash assets |
135,000 |
Contributed capital |
110,000 |
| |
Earned capital |
35,000 |
| Total assets |
$215,000 |
Total liabilities and equity |
$215,000 |
Following are summary transactions that occurred during the current month.
- The company purchased supplies for $5,000 cash; none were used this month.
- Services of $2,500 were performed this month on credit.
- Services were performed for $10,000 cash this month.
- The company purchased advertising for $8,000 cash; the ads will run next month.
- The company received $1,200 cash as partial payment on accounts receivable from transaction 2.
- The company paid $3,400 cash toward the accounts payable balance reported at the beginning of the month.
- Paid $3,500 cash toward this month's wages expenses.
- The company declared and paid dividends of $500 cash.
(a) Record the effects of each transaction using the financial statement effects template.
(b) Prepare the income statement for this month and the balance sheet as of month-end.