Question

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.

1. The company purchased supplies for $5,000 cash; none were used this month.
2. Services of $2,500 were performed this month on credit.
3. Services were performed for $10,000 cash this month.
4. The company purchased advertising for $8,000 cash; the ads will run next month.
5. The company received $1,200 cash as partial payment on accounts receivable from transaction 2.
6. The company paid $3,400 cash toward the accounts payable balance reported at the beginning of the month.
7. Paid $3,500 cash toward this month's wages expenses.
8. The company declared and paid dividends of $500 cash.

(a) Record the effects of each transaction using the financial statement effects template.

Use negative signs with your answers, when appropriate.

	Balance Sheet
Transaction	Cash Asset	+	Noncash Assets	=	Liabilities	+	Contributed Capital	+	Earned Capital
Beginning bal.
1
2
3
4
5
6
7
8
Ending balance

Income Statement
Revenue	-	Expenses	=	Net Income
.		.		.
.		.		.
.		.		.
.		.		.
.		.		.
.		.		.
.		.		.
.		.		.
.		.		.
.		.		.

(b) Prepare the income statement for this month and the balance sheet as of month-end.

Do not use negative signs with any of your answers below.

Hanlon Advertising Company Income Statement
Sales revenue	$
Total expenses
Net income

Hanlon Advertising Company Retained Earnings Reconciliation
Retained earnings. beginning of month	$
Add: Net income
Less: Dividends
Retained earnings. end of month

Hanlon Advertising Company

Balance Sheet

Cash	$
Noncash assets
Total assets	$

Liabilities
Contributed capital
Retained earnings
Total equity
Total liabilities and equity

Answer 1