The following selected events were experienced by either Landscapes Deluxe. Inc.

Question

The following selected events were experienced by either Landscapes Deluxe. Inc., a corporation, or Bill Tinsley, the major stockholder. State whether each event (1) increased. (2) decreased, or (3) had no effect on the total assets of the business Identify any specific asset affected. (If an event has no effect on the total assets of the business choose either personal transaction or asset accounts offset.) Received $150,000 cash and issued stock to a stockholder. Purchased land for a building site and signed a $100,000 promissory note to the bank. Purchased supplies on account for $3,000. Tinsley used personal funds to purchase a pool table for his home. Purchased equipment for the business for $87,000 cash. Received $38,000 cash from customers for services performed. Sold land and received a note receivable of $46,000 (the land was carried on the company's books at $46,000). Earned $12,000 in revenue for services performed. The customer promises to pay Landscape Deluxe in one month. Paid $19,000 cash on accounts payable. The business paid Tinsley a cash dividend of $5,000.

Explanation / Answer

Solution.

Transaction Asset affect Account affected a. Cash Increase b. Land Increase c. No effect Stock increase, Cash decrease d. Personal Transaction Personal Transaction (Increase drawing ) e. No effect Equipment Increase, Cash decrease f. Cash Increase g. Land Decrease h. Debtor Increase i. Cash Decrease j. Cash Decrease

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