Transaction Assets = Liabilities + Stockholders\' Equity Beginning $0 $0 $0 $17,

Question

Transaction Assets = Liabilities + Stockholders' Equity Beginning $0 $0 $0 $17,160V $17,160v ,740 2. Borrow cash 3. Purchase equipment 4. Revenues earned 6. Dividends The owners invested $17,160 cash into the business in exchange for shares of common stock in Thomas Company The company borrows $7,740 cash from the local bank. The company pays cash for a piece of equipment. The list price was $9,100, but after negotiation, the final purchase price was $8,700 During the year, Thomas Company earned revenues totaling $298,400. The cash has been collected from the customers for all revenue earned this year Thomas Company incurred expenses totaling $211,700 during that same year. All of the expenses incurred this year were paid in cash. At the end of each quarter, Thomas Company distributed cash to its stockholders. The sum of those quarterly distributions was $15,400

Explanation / Answer

Effect of the given transactions on the assets, liabilities, and stockholders' equity will be showm in the following manner:

Notes:

Equipment was purchased by paying cash. This transaction will both increase and reduce assets by the same amount. Cash will decrease by $8,700 and equipment will increase by $8,700. Therefore, there would be no effect on total assets. The value of total assets will remain same.

Transaction Assets = Liabilities + Stockholders' equity Beginning 0 0 0 1. Investment in the business 17160 17160 2. Borrow cash 7740 7740 3. Purchase equipment 4. Revennues earned 298400 298400 5. Expenses incurred -211700 -211700 6. Dividends -15400 -15400

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