Question

Analyzing and Reporting Financial Statement Effects of Transactions
M.E. Carter launched Carter Company, a professional services firm on March 1. The firm will prepare financial statements at each month-end. In March (its first month), Carter executed the following transactions. Enter the transactions, a through g, into the financial statement effects template below.
a. Carter (owner) invested in the company $200,000 cash and $40,000 in property and equipment. The company issued common stock to Carter.
b. The company paid $6,400 cash for rent of office furnishings and facilities for March.
c. The company performed services for clients and immediately received $8,000 cash for these services.
d. The company performed services for clients and sent a bill for $48,000 with payment due within 60 days.
e. The company compensated an office employee with $9,600 cash as salary for March.
f. The company received $20,000 cash as partial payment on the amount owed from clients in transaction d.
g. The company paid $1,870 cash in dividends to Carter (owner).

Use negative signs with answers, if appropriate.

						Balance Sheet								Income Statement
Transaction		Cash Asset	+	Noncash Assets	=	Liabilities	+	Contrib. Capital	+	Earned Capital		Revenues	-	Expenses	=	Net income
a. Issued stock for cash and PPE.		Answer		Answer		Answer		Answer		Answer		Answer		Answer		Answer
b. Paid rent.		Answer		Answer		Answer		Answer		Answer		Answer		Answer		Answer
c. Performed services for cash.		Answer		Answer		Answer		Answer		Answer		Answer		Answer		Answer
d. Performed services on account.		Answer		Answer		Answer		Answer		Answer		Answer		Answer		Answer
e. Paid wages.		Answer		Answer		Answer		Answer		Answer		Answer		Answer		Answer
f. Received payments on accounts receivable.		Answer		Answer		Answer		Answer		Answer		Answer		Answer		Answer
g. Paid dividends		Answer		Answer		Answer		Answer		Answer		Answer		Answer		Answer

Answer 1

Use negative signs with answers, if appropriate.

						Balance Sheet								Income Statement
Transaction		Cash Asset	+	Noncash Assets	=	Liabilities	+	Contrib. Capital	+	Earned Capital		Revenues	-	Expenses	=	Net income
a. Issued stock for cash and PPE.		200000		40000				240000
b. Paid rent.		-6400								-6400				6400		-6400
c. Performed services for cash.		8000								8000		8000				8000
d. Performed services on account.				48000						48000		48000				48000
e. Paid wages.		-9600								-9600				9600		-9600
f. Received payments on accounts receivable.		20000		-20000
g. Paid dividends		-1870								-1870