Assignment: Analyzing the Effect of Transactions

Purpose of Assignment

The purpose of this assignment is to help you become familiar with examining transactions and how it affects the balance sheet.

Assignment Steps

Resources: Financial Accounting: Tools for Business Decision Making

Write in sentence format a response to each of the following scenarios from Exercise E3-1 in Financial Accounting (p. 132) describing the effect of each transaction on assets, liabilities, and stockholder's equity:

• Selected transactions for Thyme Advertising Company, Inc.

o Issued common stock to investors in exchange for cash received from investors.
o Paid monthly rent.
o Received cash from customers when service was performed.
o Billed customers for services performed.
o Paid dividend to stockholders.
o Incurred advertising expense on account.
o Received cash from customers billed in (4).
o Purchased additional equipment for cash.
o Purchased equipment on account.

Use the Excel spreadsheet to record your answers and submit your responses.

E3-1 Selected transactions for Thyme Advertising Company, Inc. are listed here.

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.

Instructions

Describe the effect of each transaction on assets, liabilities, and stockholders' equity. For example, the first answer is (1) Increase in assets and increase in stockholders' equity.

Analyze the effect of transactions on assets, liabilities, and stockholders' equity.