Reference no: EM133101526

Question - Transactions and Financial Statements - Les Stanley established an insurance agency on July 1, 20Y5, and completed the following transactions during July:

1. Opened a business bank account in the name of Stanley Insurance Inc., with a deposit of $48,000 in exchange for common stock.

2. Borrowed $25,000 by issuing a note payable.

3. Received cash from fees earned, $29,000.

4. Paid rent on office and equipment for the month, $3,200.

5. Paid automobile expense for the month, $2,000, and miscellaneous expense, $1,000.

6. Paid office salaries, $4,500.

7. Paid interest on the note payable, $110.

8. Purchased land as a future building site, $56,500.

9. Paid dividends, $4,400.

Required -

1. Indicate the effect of each transaction and the balances after each transaction, using the integrated financial statement framework. If an amount box does not require an entry, leave it blank. Enter account decreases and net cash outflows as negative amounts.

2. Which of the following shows the correct effect on the accounting equation for a utility expense that is paid when billed?

a. Increase assets; increase stockholders' equity

b. Decrease assets; decrease stockholders' equity

c. Decrease assets; decrease liabilities

d. Increase liabilities; decrease stockholders' equity

3. Prepare an income statement for July.

4. Prepare a statement of stockholders' equity for July. If your answer is zero enter "0".

5. Prepare a balance sheet as of July 31, 20Y5.

6. Prepare a statement of cash flows for July. Use the minus sign to indicate cash out flows, decreases in cash, or cash payments. if your answer is zero enter "0".