Using transactions listed in P2-1 for Stanley Insurance Inc. indicate the effects of each transaction on the liquidity metric Cash and profitability metric Net Income - Cash Basis.
P2-1
Les Stanley 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 Stanley Insurance Inc., with a deposit of $60,000 in exchange for common stock.
b. Borrowed $100,000 by issuing a note payable.
c. Received cash from fees earned, $30,000.
d. Paid rent on office and equipment for the month, $5,000.
e. Paid automobile expense for the month, $2,500, and miscellaneous expense, $1,000.
f. Paid office salaries, $6,500.
g. Paid interest on the note payable, $500.
h. Purchased land as a future building site, paying cash of $120,000.
i. Paid dividends, $3,000.