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

During the month of July, the company had the following activities:
a. Issued 6,000 shares of common stock for $ 600,000 cash.
b. Borrowed $ 60,000 cash from a local bank, payable in four years.
c. Bought a building for $ 166,000; paid $ 66,000 in cash and signed a three- year note for the balance.
d. Paid cash for equipment that cost $ 90,000.
e. Purchased supplies for $ 90,000 on account.
Required:
1. Analyze transactions (a)€“(e) to determine their effects on the accounting equation. Use the format shown in the demonstration case on page 69.
2. Record the transaction effects determined in requirement 1 using a journal entry format.
3. Summarize the journal entry effects from requirement 2 using T- accounts.
4. Prepare a trial balance at July 31.
5. Prepare a classified balance sheet at July 31.
6. As of July 31, has the financing for B& B€™s investment in assets primarily come from liabilities or stockholders€™ equity?

Transcribed Image Text:

Accounts Payable Buildings Cash Common Stock Equipment 50,000 Land 500,000 Notes Payable (long-term) 90,000 Retained Earnings 170,000 Supplies 48.000 $444,000 5,000 966,000 9,000