Problem $8$: P$2-1$

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PR$.02\mathrm{.}01$

Transactions and Financial Statements

Roger Smith established an insurance agency on July $1,20$Y$5,$ and completed the following transactions during July:

a$.$ Opened a business bank account in the name of Smith Insurance Inc., with a deposit of $$30,000$ in exchange for common stock.

b$.$ Borrowed $$50,000$ by issuing a note payable.

c$.$ Received cash from fees earned, $$15,000.$

d$.$ Paid rent on office and equipment for the month, $$2,500.$

e$.$ Paid automobile expense for the month, $$1,250,$ and miscellaneous expense, $$500.$

f$.$ Paid office salaries, $$3,250.$

g$.$ Paid interest on the note payable, $$250.$

h$.$ Purchased land as a future building site, paying cash of $$60,000.$

i$.$ Paid dividends, $$1,500.$

Instructions:

Indicate the effect of each transaction and the balances after each transaction, using the integrated financial statement framework. After all transactions are recorded, enter Net income under the Income Statement column. If an amount box does not require an entry, leave it blank. Enter account decreases and net cash outflows as negative amounts using the minus sign.

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