Ed’s Lawn Service entered into the following transactions during 2015, its first year of operations:
1. Collected $12,000 in cash from shareholders.
2. Borrowed $5,000 from a bank.
3. Purchased two parcels of land for a total of $10,000.
4. Paid $5,000 to rent lawn equipment for the remainder of the year.
5. Provided lawn services, receiving $10,000 in cash and $4,000 in receivables.
6. Paid miscellaneous expenses of $4,000.
7. Sold one parcel of land with a cost of $3,000 for $2,800.
8. Paid a $2,200 dividend to the shareholders.
a. In a manner similar to Figure 4–2, show how each transaction affected the fundamental accounting equation and prepare an income statement, a statement of shareholders’ equity, a year-end balance sheet, and a statement of cash flows for 2015.
b. Journalize each transaction and post it in the appropriate T-accounts. From this information, prepare a year-end balance sheet, an income statement, a statement of shareholders’ equity, and a statement of cash flows for 2015.