Pete s Painting Service was organized as a corporation on January
Pete’s Painting Service was organized as a corporation on January 20, 2014, by three individuals, each receiving 5,000 shares of capital from the new company. The following is a schedule of the cumulative account balances immediately after each of the first 10 transactions ending on January 31, 2014.
1. Analyze the changes in this schedule for each transaction, and then explain the transaction. Transaction (a) is an example:
a. Cash increased $ 75,000, and Contributed capital (shareholders’ equity) increased $ 75,000. Therefore, transaction (a) was an issuance of shares of the corporation for $ 75,000 cash.
2. Based only on the preceding schedule after transaction (j), prepare a statement of earnings, a statement of shareholders’ equity, and a statement of financial position.
3. For each of the transactions, indicate the type of effect on cash flows (O for operating, I for investing, or F for financing) and the direction (+ for increase and – for decrease) and amount of the effect. If there is no effect, write “none.” The first transaction is provided as an example.
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