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 $50,500 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, $3,500.
5. Paid automobile expense for the month, $2,000, and miscellaneous expense, $700.
6. Paid office salaries, $4,300.
7. Paid interest on the note payable, $100.
8. Purchased land as a future building site, $55,000.
9. Paid dividends, $3,700.

Instructions:

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.

Statement of Cash Flows Assets + Land Liabilities = Notes Payable Balance Sheet + Stockholders' Equity + Common Stock + Retained Earnings Cash Issued common stock 50,50 50,50 25,00 25,00 Issued note payable Balances 75,00 X 25,00 50,50 C. Fees earned 29,00 29,00 Balances 104,01 x 25,00 50,50 29,00 d. Rent expense -5,000 x Balances 25,00 50,500 -5,000 24,00 x -2,704 21,30 99,00 X -2,706 96,301 -6,500 e. Paid expenses Balances 50,500 25,00 -6,500 f. Paid salary expense Balances -100 -100 x Paid interest expense Balances h. Purchased land -55,00 55,00 Balances 1. Paid dividends -3,706 -3,701 Balances, July 31 Statement of Cash Flows Income Statement a. Financing c. Rent expense x -5,000 x g Operating x d. Auto expense x -2,000 x Investing x e. Salary expense x 0 -6,500 x -100 0 e. Interest expense x f. Miscellaneous expense X 0 -700 x 4 g. Fees earned x 29,00 x Net income 14,701 X 0 : 2. Which of the following shows the correct effect on the accounting equation for a utility expense that is paid when billed? Feedback 3. Prepare an income statement for July. Stanley Insurance Inc. Income Statement For the Month Ending July 31, 2045 Revenues: Expenses: Total expenses Net income Feedback Prepare a statement of stockholders' equity for July. If your answer is zero enter "0". Stanley Insurance Inc. Statement of Stockholders' Equity For the Month Ending July 31, 2045 Common Stock Retained Earnings Balances, July 1, 2045 Total Balances, July 31, 2045 Feedback 4. Prepare a balance sheet as of July 31, 2045. Stanley Insurance Inc. Balance Sheet July 31, 2045 Assets Total assets Liabilities Stockholders' Equity Total stockholders' equity Total liabilities and stockholders' equity Feedback 5. 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 "O". Stanley Insurance Inc. Statement of Cash Flows For the Month Ending July 31, 2045 Cash flows from operating activities: Cash flows from investing activities: Cash flows from financing activities: Feedback Feedback