CP$2-3$ Recording Transactions $($in a Journal and T$-$Accounts$)$; Preparing and Interpreting the

Balance Sheet

Performance Plastics Company $($PPC$)$ has been operating for three years. The beginning account

balances are:

During the year, the company had the following summarized activities:

a$.$ Purchased equipment that cost $$21,000$; paid $$5,000$ cash and signed a two$-$year note for the

balance.

b$.$ Issued an additional $2,000$ shares of common stock for $$20,000$ cash.

c$.$ Borrowed $$50,000$ cash from a local bank, payable June $30,$ in two years.

d$.$ Purchased supplies for $$4,000$ cash.

e$.$ Built an addition to the factory buildings for $$41,000$; paid $$12,000$ in cash and signed a

three$-$year note for the balance.

f$.$ Hired a new president to start January $1$ of next year. The contract was for $$95,000$ for each

full year worked.

Required:

Analyze transactions $(a)-(f)$ to determine their effects on the accounting equation.

TIP: You won't need new accounts to record the transactions described above, so have a quick

look at the ones listed in the beginning of this question before you begin.

TIP: In transaction $($e$),$ three different accounts are affected.

TIP: In transaction $(f),$ consider whether PPC owes anything to its new president for the current

year ended December $31.$

Record the transaction effects determined in requirement $1$ using journal entries.

Summarize the journal entry effects from requirement $2.$ Use $T-$accounts if this requirement

is being completed manually; if you are using the general ledger tool in Connect, the

journal entries will have been posted automatically to general ledger accounts that are similar

in appearance to Exhibit $2\mathrm{.}9.$

Explain your response to event $(f).$

Prepare a classified balance sheet at December $31.$

As of December $31,$ has the financing for PPC$\text{'}$s investment in assets primarily come from

liabilities or stockholders' equity?