Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Analyze the effect of the following transactions using the basic Accounting Equation showing your response in the template/ table below: a. On January 1, the

Analyze the effect of the following transactions using the basic Accounting Equation showing your response in the template/ table below:

a. On January 1, the company issued 30,000 common shares at $15 per share.

b. On January 1, 2014, the company purchased land and a building from another company in exchange for $50,000 in cash and 10,000 common shares. Then lands value is approximately one-quarter of the total value of the transaction (Hint: you need to determine a value for the common shares using the information given in part (a) and the land the building should be recorded in separate accounts).

c. Purchased a 2-year insurance policy for $4,800.

d. Bought another building for $100,000. Paid 25% in cash and the balance on a 10-year, 10% interest note payable.

e. During the year, inventory costing $225,000 was purchased, all on account.

f. Sales during the year were $275,000, of which credit sales were $200,000.

g. The inventory sold during the year had a cost of $180,000.( ie cost of goods sold exp.)

h. Payments to suppliers during the year totaled $195,000.

i. Operating expenses amounted to $40,000, all paid in cash.

j. The companys income tax rate is 30%. It paid $9,000 to the Canada Revenue Agency before the end of the year.

k. Dividends of $12,000 were declared during the year, of which $1,000 remained unpaid at year end.

Required:

Use the table below to submit your response to the question above.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Content Audits And Inventories A Handbook

Authors: Paula Ladenburg Land

1st Edition

1937434389, 978-1937434380

More Books

Students also viewed these Accounting questions