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Effect of Transactions 2 (Example)

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Analyzing the Effects of Transactions Student Name Institution Analyzing the Effects of Transactions Issued Common Stock to Investors in Exchange for Cash Received from Investor The balance sheet is impacted in one way or another when Thyme Advertising Company issues stocks. The effect comes along as a result of the increase in the business’s assets as well as the stockholders’ equity (Helstrom 2017). It happens following the fact that the company opts to issue its stock to obtain certain business-related goals. For instance the main aim could be to come up with adequate capital to buy more new equipment. It could also be aiming at raising more cash to make payments to the employees and vendors. A given company can decide to issue the stock either at a price way above its value or “Par value price.” Illustrating how the balance sheet is influenced when the stock is issued if a particular company purchased new equipment amounting to $300 the machine account will be debited by the same amount implying an increase of the business’s assets. At the same time the liabilities account will be credited indicating that the company is experiencing an added burden which adds to expenses since it has been paid for although not an immediate one. References Financial Accounting and Reporting Standards for Private Entities. (2006). Accounting Horizons 20(2) 179-194. Helstrom K. (2017). What Happens When a Company Receives Cash in Exchange for Issuing Stock?. Retrieved 30 January 2017 from P. Kieso D. Weygandt J. & Fewox C. (2011). Financial accounting (8th ed.). Hoboken N.J.: Wiley. Kimmel P. Weygandt J. & Kieso D. (2010). Financial accounting (8th ed.). Hoboken NJ: John Wiley. Purchase Office Supplies on Account | Double Entry Bookkeeping. (2016). Double Entry Bookkeeping. Retrieved 30 January 2017 from [...]

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Purpose of Assignment The purpose of this assignment is to help you become familiar with examining transactions and how it affects the balance sheet. Assignment Steps Resources: Financial Accounting: Tools for Business Decision Making Write a minimum 150-word response to each of the following scenarios from Exercise E3-1 in Financial Accounting (p. 132) describing the effect of each transaction on assets, liabilities, and stockholder's equity: Selected transactions for Thyme Advertising Company, Inc. Issued common stock to investors in exchange for cash received from investors. Paid monthly rent. Received cash from customers when service was performed. Billed customers for services performed. Paid dividend to stockholders. Incurred advertising expense on account. Received cash from customers billed in (4). Purchased additional equipment for cash. Purchased equipment on account. Use the Excel® spreadsheet to record your answers and submit with your responses.

Subject Area: Accounting

Document Type: Paraphrasing

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Words 825

Pages 3

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Expert writerkevin

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