4.7 Refer to the transactions pertaining to Bayshore Radiology Center presented in this chapter. Restate the impact of the transactions on Bayshore's balance sheet using these data:

a. Transaction 2: The $200,000 equipment purchase is made with long-term borrowings instead of cash.

b. Transaction 3: The $20,000 in supplies are purchased with cash instead of on trade credit.

c. Transaction 4: The $50,000 in services provided are immediately paid for by patients instead of billed to third-party payers.

Chapter 4: The Balance Sheet and Statement of Cash Flows 133 events are transformed into financial statement data. The primary hind all balance sheet transactions is that the basic accounting ust be preserved (i.e., the balance sheet must balance). Thus, cach ust have a dual effect, either one on the left side and one on the uation m transaction must have right side, or offsettin eq or offietting effects on the same side nt by owners. Suppose five radiologists decide to open a diag of 1. Investment b ter that they incorporate as an investor-owned business called c cen Bushore Radiology Center. They each invest $200,000 cash in the ess in exchange for $200,000 of common stock. The transaction equal increase in both assets and equity. In this case, there rease in the cash account of $1,000,000 and an increase in the in busi results in an is an inc of n stock account of $1,000,000. After the transaction, the balance sheet looks like this as Common stock Total claims $1,000,000 $1,000,000 $1,000,000 Total assets $1,000,000 2. Purchase of equipment for cash. To support operations, the business needs diagnostic equipment. Assume that the first piece of equipment purchased costs $200,000, and it is paid for in cash. This transaction sults in a change in the composition of the business's assets, but the re nt. totals are unaffected 800,000 Common stock $1,000,000 Cash Gross fixed assets Total assets 200,000 $1,000,000 Total claims $1,000,000 Total assets and total claims still amount to $1,000,000 because no new capital was acquired by the business. 3. Purchase of supplies on credit. Assume that Bayshore purchases medical supplies for $20,000. The supplier's terms give the center 60 ays to pay the bill. Assets are increased by this transaction because of e expected benefit of using these supplies to provide services. Also liabilities (accounts payable) are increased by the supplier: amount due the S 800,000 Accounts payable S 20,000 20,000 Common stock 1,000,000 Supplies Gross fixed assets 200,000 Total assets$1,020,000 Total claims $1,020,000