Assume that Cathedral Enterprises, which is in its first year of operations, entered into the following transactions. Show how the five transactions affect the accounting equation and prepare an income statement, statement of shareholders’ equity, balance sheet, and statement of cash flows.
1. Shareholders contributed $10,000 cash.
2. Performed services for $8,000, receiving $6,000 in cash and a $2,000 receivable.
3. Incurred expenses of $6,000. Paid $3,000 in cash and $3,000 is still payable.
4. Purchased land for $12,000. Paid $2,000 in cash and signed a long-term note for the remainder.
5. Paid the shareholders $400 in the form of a dividend.
6. Sold one-half of the land purchased in (4) for $7,000 cash.