Recording Investing and Financing Activities Refer to E2-5.

Determining Financial Statement Effects of Several Transactions The following events occurred for Favata Company:

a. Received investment of \(\$ 20,000\) cash by organizers.

b. Borrowed cash from a bank and signed a note for \(\$ 6,000\).

c. Purchased \(\$ 12,000\) in land; paid \(\$ 1,000\) in cash and signed a mortgage note with a local bank for the balance (due in 15 years).

d. Loaned \(\$ 300\) to an employee who signed a note due in three months.

e. Paid the bank the amount borrowed in \((b)\).

f. Purchased \(\$ 8,000\) of equipment, paying \(\$ 1,000\) in cash and signing a note due to the manufacturer.
Required:
For each of the events \((a)\) through \((f)\), perform transaction analysis and indicate the account, amount, and direction of the effects (+ for increase and - for decrease) on the accounting equation. Check that the accounting equation remains in balance after each transaction. Use the following headings:
Event Assets \(=\) \( \qquad \)
+ Shareholders' Equity Required:
For each of the events in E2-5, prepare journal entries, checking that debits equal credits.
Determining Financial Statement Effects of Several Transactions The following events occurred for Favata Company:

a. Received investment of \(\$ 20,000\) cash by organizers.

b. Borrowed cash from a bank and signed a note for \(\$ 6,000\).

c. Purchased \(\$ 12,000\) in land; paid \(\$ 1,000\) in cash and signed a mortgage note with a local bank for the balance (due in 15 years).

d. Loaned \(\$ 300\) to an employee who signed a note due in three months.

e. Paid the bank the amount borrowed in \((b)\).

f. Purchased \(\$ 8,000\) of equipment, paying \(\$ 1,000\) in cash and signing a note due to the manufacturer.
Required:
For each of the events \((a)\) through \((f)\), perform transaction analysis and indicate the account, amount, and direction of the effects (+ for increase and - for decrease) on the accounting equation. Check that the accounting equation remains in balance after each transaction. Use the following headings:
Event Assets \(=\) \( \qquad \)
+ Shareholders' Equity Nike. Inc.