Analyze business transactions and the effect on the financial statements. The following business transactions occurred during Kenyon Consulting Inc's first month of business.
1. Tom Kenyon began his consulting business by depositing $25,000 into the business checking account. He received common stock in exchange.
2. Kenyon Consulting Inc provided services to customers for $35,000.
3. The company paid travel expenses in the amount of $600.
4. Kenyon Consulting borrowed $5,000 from the bank for operating capital.
5. The company purchased $350 worth of office supplies for future use from Office Max for cash.
6. During the month Kenyon Consulting paid $5,300 for operating expenses.
7. The company paid monthly rent on the retail space in the amount of $500.
8. The company paid the staff $2,200.
9. The company paid a dividend of $500 to the owner, Tom Kenyon.
10. On the last day of the month, Kenyon Consulting purchased equipment costing $8,500 by signing a note payable with the bank.
Required
For each of the transactions listed above do the following:
a. Identify whether it is an operating, investing or financial transaction.
b. Determine whether there is an increase, decrease, or no effect on the total assets of the business.
c. Determine whether there is an increase, decrease, or no effect on net income.
d. Indicate on which financial statement each amount would appear: the income statement (IS), the balance sheet (BS), the statement of changes in shareholder's equity (OE), or the statement of cash flows (CF). Some will be shown on more than one statement.