Question

The following business transactions occurred during Buck’s Hunting Gear, Inc.’s first month of business:
a. Buck began his business by depositing $25,000 into the business checking account. He received common stock in exchange.
b. The company provided services to customers for $30,000 cash.
c. The company paid travel expenses in the amount of $1,000 cash.
d. The company borrowed $5,000 from the bank for operating capital.
e. The company purchased $275 worth of office supplies (for future use) from Office Market for cash.
f. During the month, the company paid cash of $5,000 for operating expenses.
g. The company paid monthly rent on the retail space in the amount of $1,250.
h. The company paid the staff $4,200.
i. The company declared and paid a dividend of $1,000 to the owner, John Buck.
j. On the last day of the month, Buck’s purchased equipment costing $6,250 by signing a note payable with the bank.

Requirements
For each transaction in items (a)–(j), do the following:
1. Identify whether it is an operating, investing, or financing transaction.
2. Determine whether there is an increase, decrease, or no effect on the total assets of the business.
3. Determine whether there is an increase, decrease, or no effect on net income.
4. Indicate on which financial statement each amount would appear: the income statement (IS), the balance sheet (BS), the statement of changes in shareholder’s equity (SE), or the statement of cash flows (CF). (Some will be shown on more than one statement.)



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  • CreatedSeptember 01, 2014
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