P2-63A. (Learning Objectives 1, 2, 3: Analyzing transactions; understanding how accounting works; journalizing transactions) Demers Real Estate Co. experienced the following events during the organizing phase and its first month of operations. Some of the events were personal for the shareholders and did not affect the business. Others were transactions of the business.

Requirements 1. Classify each of the preceding events as one of the following:

a. A business-related event but not a transaction to be recorded by Demers Real Estate Co.

b. A business transaction for a shareholder, not to be recorded by Demers Real Estate Co.

c. A business transaction to be recorded by Demers Real Estate Co.
2. Analyze the effects of the preceding events on the accounting equation of Demers Real Estate Co.
3. Record the transactions of the business in its journal. Include an explanation for each entry.

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Nov 4 David Demers, the major shareholder of a real estate company, received $75,000 cash from an inheritance. 5 Demers deposited $45,000 cash in a new business bank account titled Demers Real Estate Co. The business issued ordinary shares to Demers. 6 The business paid $700 cash for letterhead stationery for the new office. 7 The business purchased office equipment. The company paid cash of $13,000 and agreed to pay the account payable for the remainder, $7,000, within three months. 10 Demers sold EVN shares, which he had owned for several years, receiving $74,500 cash from his stockbroker. 11 12 Demers deposited the $74,500 cash from sale of the EVN shares in his personal bank account. A representative of a large company telephoned Demers and told him of the company's intention to transfer $16,000 of business to Demers. 18 Demers finished a real estate deal for a client and submitted his bill for services, $4,000. Demers expects to collect from the client within two weeks. 21 25 30 The business paid half its account payable on the equipment purchased on November 7. The business paid office rent of $1,500. The business declared and paid a cash dividend of $2,100.