Bearing & Brakes Corporation (B&B) was incorporated as a private company. The co

Question

Bearing & Brakes Corporation (B&B) was incorporated as a private company. The company 's accounts included the following at June 30:

Accounts payable.      $55,000
Buildings.                   $540,000
Cash.                             $94,000
Common Stock.           $210,000
Equipment.                 $156,000
Land.                           $464,000
Notes payable (long-term) $9,000
Retained Earnings.        $986,000
Supplies.                        $6,000

During the month of July, the company had the following activities :
a. Issued 3,300 shares of common stock for $330,000 cash.
b. Borrowed $80,000 cash from a local bank, payable in four years.
c. Bought a building for $174,000; paid $70,000 in cash and signed a three-year note for the balance.
d. Paid cash for equipment that cost $94,000
e. Purchased supplies for $94,000 on account.

1. Analyze transactions (a) -(e) to determine their effects on the accounting equation

Explanation / Answer

Adjustment Debit Credit Debit Credit Debit Credit Accounts Payable $55,000 $55,000 Building $5,40,000 $1,74,000 $7,14,000 Cash $94,000 $4,10,000 $2,58,000 $2,46,000 Common Stock $2,10,000 $3,30,000 $5,40,000 Equipment $1,56,000 $94,000 $2,50,000 Land $4,64,000 $4,64,000 Bank Borrowings $80,000 $80,000 Notes Pyable $9,000 $1,04,000 $1,13,000 Reatined Earnings $9,86,000 $9,86,000 Supplies $6,000 $94,000 $1,00,000 $12,60,000 $12,60,000 $7,72,000 $7,72,000 $17,74,000 $17,74,000 Event Assets = Liabilities + Stockholder's equity (a) $3,30,000 $3,30,000 (b) $80,000 $80,000 (c) $1,74,000 $1,04,000 -$70,000 (d) $94,000 -$94,000 (e) $94,000 -$94,000 Total $5,14,000 $5,14,000

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