Using transactions listed in P2-1 for Smith Insurance Inc. indicate the effects of each transaction on the liquidity metric Cash and profitability metric Net Income – Cash Basis.

Data From P2-1

Roger Smith established an insurance agency on July 1, 20Y5, 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.