Question

Analyzing Transactions Using the Financial Statement Effects Template Hanlon Advertising Company began the current month with the following balance sheet.

Cash	$ 80,000	Liabilities	$ 70,000
Noncash assets	135,000	Contributed capital	110,000
		Earned capital	35,000
Total assets	$215,000	Total liabilities and equity	$215,000

Following are summary transactions that occurred during the current month.

1. The company purchased supplies for $5,000 cash; none were used this month.

2. Services of $2,500 were performed this month on credit.

3. Services were performed for $10,000 cash this month.

4. The company purchased advertising for $8,000 cash; the ads will run next month.

5. The company received $1,200 cash as partial payment on accounts receivable from transaction 2.

6. The company paid $3,400 cash toward the accounts payable balance reported at the beginning of the month.

7. Paid $3,500 cash toward this month's wages expenses.

8. The company declared and paid dividends of $500 cash.

(a) Record the effects of each transaction using the financial statement effects template.

Use negative signs with your answers, when appropriate.

Balance Sheet

Transaction

Cash Asset+Noncash Assets=Liabilities+ContributedCapital+EarnedCapital

Beginning Bal
Ending Bal

Income Statement

Revenu (minus) Expenses = Net income

Prepare the income statement for this month and the balance sheet as of month-end.

Do not use negative signs with any of your answers below.

Hanlon Advertising Company
Income Statement

Sales revenue	0
Total expenses	0
Net income	0

Hanlon Advertising Company

Retained Earnings Reconciliation

Retained earnings. beginning of month	$0
Add: Net income
Less: Dividends
Retained earnings. end of month	$0

Hanlon Advertising Company

Balance Sheet

cash	$0
Noncash assets
Total assets	$0
Liabilities	$0
Contributed capital	0
Retained earnings	0
Total equity	0
Total liabilities and equity	$0

Answer 1

Balance Sheet :

Cash Asset + Noncash Assets = Liabilities + Contributed Capital + Earned Capital

Transaction	Cash Asset	Noncash Assets	Liabilities	Contributed Capital	Earned Capital
Beginning Balance	80000	135000	70000	110000	35000
1)	-5000	5000	0	0	0
2)	0	2500	0	0	2500
3)	10000	0	0	0	10000
4)	-8000	8000	0	0	0
5)	1200	-1200	0	0	0
6)	-3400	0	-3400	0	0
7)	-3500	0	0	0	-3500
8)	-500	0	0	0	-500
Ending Balance	70800	149300	66600	110000	43500

Income Statement :

Revenue - Expenses = Net income

	Revenue	Expenses	Net income
Beginning Balance	0	0	0
1)	0	0	0
2)	2500	0	2500
3)	10000	0	10000
4)	0	0	0
5)	0	0	0
6)	0	0	0
7)	0	3500	-3500
8)	0	0	0
Ending Balance	12500	3500	9000

Hanlon Advertising Company

Income Statement

Sales revenue	12500
Total expenses	3500
Net income	9000

Retained Earnings Reconciliation

Retained earnings. beginning of month	$35000
Add: Net income	9000
Less: Dividends	-500
Retained earnings. end of month	$43500

Balance Sheet

cash	$70800
Noncash assets	149300
Total assets	$220100
Liabilities	$66600
Contributed capital	110000
Retained earnings	43500
Total equity	153500
Total liabilities and equity	$220100