Stafford Press was founded in 2000 as a one-man job printing firm in a small southwestern town. Shortly after its founding. Lucas Stafford, the owner, decided to concentrate on one specialty line of printing. Because of a high degree of technical proficiency, the company experienced a rapid growth.
However, Stafford Press suffered from a competitive disadvantage in that the major market for its specialized output was in a metropolitan area over 300 miles away from the company's plant. For this reason, in 2010. having accumulated some extra cash to finance a move, the owner decided to move nearer his primary market. He also decided to expand and modernize his facilities at the time of the move. After some investigation, an attractive site was found in a suburb of his primary market, and the move was made.
EXHIBIT 1

Questions
1. Analyze the effect of each of these transactions on the items in the balance sheet and income statement. For transactions that affect owner's equity, distinguish between those that affect the net income of the current year and those that do not. In most cases, the results of your analysis can be set forth most clearly in the form of journal entries.
2. Adjust the balance sheet in Exhibit 1 to show the effect of these transactions.

Transcribed Image Text:

STAFFORD PRESS Condensed Balance Sheet (Prior to Move) Assets Llabilities and Owner's Equity Current assets Cash Other current assets $395,868 251,790 Current liabilities Common stock Retained earnings $160,223 400,000 358,648 $647,658 34,034 151,008 86,171 Total current assets Property and equipment Land Buildings $350,064 Less: Accumulated depreciation199,056 265,093 Less: Accumulated depreciation 178,922 Equipment Total assets 5918,871 Total liabilities and owner's equity $918,871