b. Borrowed $186,000 cash from the bank and signed a10-year note. c. A stockhold
ID: 2447420 • Letter: B
Question
b. Borrowed $186,000 cash from the bank and signed a10-year note.
c. A stockholder sold $5,000 of his capital stock inSwish Watch Corporation to another investor.
d. Built an addition on the factory for $200,000 andpaid cash to the construction company.
e. Purchased equipment for the new addition for$44,000, paying $12,000 in cash and signing a
six-month note for the balance.
f. Returned a $4,000 piece of equipment, frome, because it proved to be defective; received a
cash refund.
g. At the end of 2006, lent $2,000 cash to the companypresident, Thor Gunn arson, who signed
a note with terms requiring repayment of the loan in oneyear.
1. Complete the spreadsheet that follows, usingplus (+) for increases and minus (-) for
decreases for each account.
Event
Assets
=
Liabilities
+
Stockholders' Equity
Cash
Notes Receivable
Equipment
Building
=
Notes Payable
Contributed Capital
Retained Earnings
a)
=
b)
=
c)
=
d)
=
e)
=
f)
=
g)
=
Totals
=
Event
Assets
=
Liabilities
+
Stockholders' Equity
Cash
Notes Receivable
Equipment
Building
=
Notes Payable
Contributed Capital
Retained Earnings
a)
=
b)
=
c)
=
d)
=
e)
=
f)
=
g)
=
Totals
=
Explanation / Answer
ASSETS
= LIABILITIES
+STOCK HOLDERS' EQUITY
Event
Cash
Notes
Receivable
Eqpmnt
Bldng
NOTES.PAYABLE
Stockholders
Cont Capital
Retained
Earnings
a
+109,000
+109,000
b
+186,000
+186,000
c
NO EFFECT ON ACCOUNTING EQUATION
d
-200,000
+200,000
e
-12,000
+44,000
+32,000
f
+4,000
-4,000
g
-2,000
+2,000
85,000
2,000
40,000
200,000
218,000
109,000
ASSETS
= LIABILITIES
+STOCK HOLDERS' EQUITY
Event
Cash
Notes
Receivable
Eqpmnt
Bldng
NOTES.PAYABLE
Stockholders
Cont Capital
Retained
Earnings
a
+109,000
+109,000
b
+186,000
+186,000
c
NO EFFECT ON ACCOUNTING EQUATION
d
-200,000
+200,000
e
-12,000
+44,000
+32,000
f
+4,000
-4,000
g
-2,000
+2,000
85,000
2,000
40,000
200,000
218,000
109,000
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