Transaction Analysis Amanda Webb opened a home health care business under the name Home Care Inc. During its first month of operations, the business had the following transactions: Issued common stock to Ms. Webb and other stockholders in exchange for $30,000 cash. Paid $18,500 cash for a parcel of land on which the business will eventually build an office building. Purchased supplies for $2,750 on credit. Used the supplies purchased in Transaction c. Paid rent for the month on office space and equipment, $800 cash. Performed services for clients in exchange for $3,910 cash. Paid salaries for the month, $1,100. Paid $650 cash for advertising in the current month. Paid $1,900 on account for supplies purchased in Transaction c. Performed services for clients on credit in the amount of $1,050. Paid a $600 dividend to stockholders. Required: Prepare an analysis of the effects of these transactions on the accounting equation of the business. Use the format below. If an amount box does not require an entry, leave the cell blank. Enter decreases in account values as negative numbers. If the effect of a transaction is to increase AND decrease the same item (i.e. Asset, Liability), enter "0" since the net effect on the item is zero. Assets = Liabilities + Stockholders' Equity ContributedCapital + RetainedEarnings

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Transaction Analysis

Amanda Webb opened a home health care business under the name Home Care Inc. During its first month of operations, the business had the following transactions:

Issued common stock to Ms. Webb and other stockholders in exchange for $30,000 cash.
Paid $18,500 cash for a parcel of land on which the business will eventually build an office building.
Purchased supplies for $2,750 on credit.
Used the supplies purchased in Transaction c.
Paid rent for the month on office space and equipment, $800 cash.
Performed services for clients in exchange for $3,910 cash.
Paid salaries for the month, $1,100.
Paid $650 cash for advertising in the current month.
Paid $1,900 on account for supplies purchased in Transaction c.
Performed services for clients on credit in the amount of $1,050.
Paid a $600 dividend to stockholders.

Required:

Prepare an analysis of the effects of these transactions on the accounting equation of the business. Use the format below. If an amount box does not require an entry, leave the cell blank. Enter decreases in account values as negative numbers. If the effect of a transaction is to increase AND decrease the same item (i.e. Asset, Liability), enter "0" since the net effect on the item is zero.

	Assets	=	Liabilities	+	Stockholders' Equity
					Contributed Capital	+	Retained Earnings

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