Chris Woods established an insurance agency on July 1, 2011, and completed the
following transactions during July:
a. Opened a business bank account in the name of Woods Insurance Inc., with
a deposit of $40,000 in exchange for capital stock.
b. Borrowed $30,000 by issuing a note payable.
c. Received cash from fees earned, $28,000.
d. Paid rent on office and equipment for the month, $3,000.
e. Paid automobile expense for the month, $1,800, and miscellaneous expense,
f. Paid office salaries, $4,200.
g. Paid interest on the note payable, $100.
h. Purchased land as a future building site, $55,000.
i. Paid dividends, $2,000.
1. Indicate the effect of each transaction and the balances after each transaction,
using the integrated financial statement framework.
2. Briefly explain why the stockholders’ investments and revenues increased
stockholders’ equity, while dividends and expenses decreased stockholders’
3. Prepare an income statement and retained earnings statement for July.
4. Prepare a balance sheet as of July 31, 2011.
5. Prepare a statement of cash flows for July.
Please see attached Excel spreadsheet, the course wants the information on said document.
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