Textbook Problem

SERIES B EXERCISE

CLASSIFYING BUSINESS TRANSACTIONS Bob Jacobs opened an advertising agency. The following transactions occurred during January of the current year. Classify each transaction as an operating, an investing, or a financing activity.

(a) Invested cash in the business, $5,000.

(b) Purchased office equipment. Paid $2,500 cash and agreed to pay the balance of $2,000 in four monthly installments.

(c) Paid office rent, $400.

(d) Received cash for services rendered, $700.

(e) Paid phone bill, $95.

(f) Received cash for services rendered, $600.

(g) Made payment on loan in transaction (b), $500.

(h) Paid wages to pan-time employee, $800.

(i) Paid electricity bill, $100.

(j) Withdrew cash for personal use, $500.

(k) Paid wages to pan-time employee, $600.