Using transactions listed in P2-2 for Up-Date Computer Services indicate the effects of each transaction on the liquidity metric Cash and profitability metric Net Income - Cash Basis.
P2-2

Financial Statement Effects BALANCE SHEET Assets Liabilities+ Stockholders' Equity Notes Common Retained +Earnings Cash +LandPayable + Stock a. Issued common stock 25,000 27,000 52,000 (2,500) 49,500 25,000 25,000 25,000 b. Fees earned 27,000 27,000 (2,500) 24,500 Balances c. Rent expense Balances d. Issued notes payable Balances 10,000 59,500 (40,000) 19,500 (1,900) 17600 10,000 10,000 25,000 25,000 25,000 24,500 e. Purchased land 40,000 40,000 Balances 10,000 24,500 (1,900) 22,600 f. Paid expenses Balances g. Paid salary expense Balances 40,000 10,000 (4,600) 13,000 (3,000) 10,000 (4,600) 18,000 (3,000) 15,000 40,000 10,000 25,000 i. Paid dividends Balances, Aug. 31 40,000 10,000 25,000 STATEMENT OF CASH FLoWS a. Financing b. Operating c. Operating d. Financing e. Investing f. Operating g. Operating h. Financing INCOME STATEMENT 25,000 27000 (2,500) 10,000 (40,000) (1,900) (4,600) (3,000) 10,000 b. Fees earned c. Rent expense f. Auto expense f. Misc. expense g. Salary expense 27,000 (2,500) (1,200) (700) (4,600) 18,000 Net income Increase in cash