Understanding Transactions Form groups of three to five students each. Each group should choose one of the companies included in the Dow Jones Industrial Average (Exhibit 1-1 ), and find its most recent balance sheet. (You might try the company's homepage on the Internet.) Ignore much of the detail on the balance sheet, focusing on the following accounts: cash, inventory, equipment, notes payable, accounts payable, and total stockholders' equity. Divide the following six assumed transactions among the members of the group:

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1. Sold 1 million shares of common stock for a total of $11 million cash (ignore par value). 2. Bought inventory for cash of $3 million. 3. Borrowed $5 million from the bank, receiving the $5 million in cash. 4. Bought inventory for $6 million on open account. 5. Paid $4 million to suppliers for inventory bought on open account. 6. Bought equipment for $9 million cash. Required 1. The student responsible for each transaction should explain to the group how the transaction would affect the company's balance sheet, using the accounts listed earlier. 2. By using the most recent published balance sheet as a starting point, prepare a balance sheet for the company, assuming the preceding six transactions are the only transactions since the date of the latest balance sheet.