Question

Selected transactions for Thyme Advertising Company, Inc. are listed here. 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. select an effect 2. Paid monthly rent. select an effect 3. Received cash from customers when service was performed. select an effect 4. Billed customers for services performed. select an effect 5. Paid dividend to stockholders. select an effect 6. Incurred advertising expense on account. select an effect 7. Received cash from customers billed in (4). select an effect 8. Purchased additional equipment for cash. select an effect 9. Purchased equipment on account.

Answer 1

Answer:

Explanation:

1. Issued common stock to investors in exchange for cash received from inventors  - Increase in assets (cash) and an increase in equity  (Capital)

2. Paid monthly rent  - The decrease in equity and decrease in assets (cash)

3. Received cash from customers when service was rendered  - Increase in  assets (cash) and an increase in  equity

4. Billed customers for services performed  - Increase in assets (Accounts Receivable) and an increase in equity

5. Paid dividend to stockholders  - The decrease in equity and decrease in assets (cash)

6.Incurred advertising expense on account  - Decrease in equity and an increase in liability (Accounts Payable)

7.Received cash from customers billed in  - Increase in the asset (cash) and decrease in the asset (Accounts Receivable)

8.Purchased additional equipment for cash  - Increase in the asset (Equipment) and decrease in an asset (cash)

9.Purchased equipment on account  - Increase in the asset (equipment) and an increase in liabilities (Accounts payable)