Tastle Painting Service Company was organized on January 20, 2004. by three individuals, each receiving 5.000 shares
Question:
Tastle Painting Service Company was organized on January 20, 2004. by three individuals, each receiving 5.000 shares of stock from the new company. The following is a schedule of the cumulative account balances immediately after each of the first 10 transactions ending on January 31, 2004.
Required: 1. Analyze the changes in this schedule for each transaction; then explain the transaction. Transactions
(a) and
(b) are examples:
a. Cash increased $75,000, and Contributed Capital (stockholders' equity) increased $75,000.
Therefore, transaction
(a) was an issuance of the capital stock of the corporation for $75,000 cash.
b. Cash decreased $5,000, office fixtures (an asset) increased $20,000. and note payable (a liability)
increased $15,000. Therefore, transaction
(b) was a purchase of office fixtures that cost
$20,000. Payment was made as follows: cash, $5,000; note payable, $15,000. 2. Based only on the preceding schedule after transaction (/), prepare an unadjusted income statement, a statement of retained earnings, and a balance sheet. 3. For each of the transactions, indicate the type of effect on cash flows (O for operating, I for investing, F for financing) and the direction (+ for increase and - for decrease) and amount of the effect. If there is no effect, write none. The first transaction is provided as an example.
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