Ed's Lawn Service entered into the following transaction during 2012, its first year of operations: 1. Collected

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Ed's Lawn Service entered into the following transaction during 2012, its first year of operations:

1. Collected $12,000 in cash in cash from shareholders.

2. Borrowed $5,000 from a bank.

3. Purchased two parcels of land for a total $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 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 2012.

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 for2012.

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Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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