Selected transactions for Thyme Advertising Company, Inc. are listed here.

a. Describe the effect of each transaction on assets, liabilities, and stockholders' equity.

1. Issued common stock to investors in exchange for cash received from investors.

2. Paid monthly rent.

3. Received cash from customers when service was performed.

4. Billed customers for services performed.

5. Paid dividend to stockholders.

6. Incurred advertising expense on account.

7. Received cash from customers billed in (4).

8. Purchased additional equipment for cash.

Question

Damion Alvarado

Business

25 July, 00:53

Selected transactions for Thyme Advertising Company, Inc. are listed here.

a. Describe the effect of each transaction on assets, liabilities, and stockholders' equity.

1. Issued common stock to investors in exchange for cash received from investors.

2. Paid monthly rent.

3. Received cash from customers when service was performed.

4. Billed customers for services performed.

5. Paid dividend to stockholders.

6. Incurred advertising expense on account.

7. Received cash from customers billed in (4).

8. Purchased additional equipment for cash.

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Answers (1)

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Marco Banks · Answer 1

1. Issued common stock to investors in exchange for cash received from investors - There is an increase in cash because cash (asset) and increase in common stock (stockholder's equity)

2. Paid monthly rent - Decrease in cash (asset) and decrease in rent expense (liability)

3. Received cash from customers when service was performed - Increase in cash (asset) and increase in service revenue (asset)

4. Billed customers for services performed - increase in accounts receivable and increase in service revenue

5. Paid dividend to stockholders -

Decrease in cash and decrease in dividend

6. Incurred advertising expense on account - Decrease in advertising expense and increase in accounts payable

7. Received cash from customers billed in (4) - Increase in cash and decrease in accounts receivable

8. Purchased additional equipment for cash - increase in equipment and decrease in cash

Explanation:

1. Issued common stock to investors in exchange for cash received from investors - There is an increase in cash because cash (asset) and increase in common stock (stockholder's equity)

2. Paid monthly rent - Decrease in cash (asset) and decrease in rent expense (liability)

3. Received cash from customers when service was performed - Increase in cash (asset) and increase in service revenue (asset)

4. Billed customers for services performed - increase in accounts receivable and increase in service revenue

5. Paid dividend to stockholders -

Decrease in cash and decrease in dividend

6. Incurred advertising expense on account - Decrease in advertising expense and increase in accounts payable

7. Received cash from customers billed in (4) - Increase in cash and decrease in accounts receivable

8. Purchased additional equipment for cash - increase in equipment and decrease in cash