Teaching suggestion - Walk students through the following transaction analysis. 2 On July 1, Big Corporation issued $120,000 of common shares. Both Cash and Common Shares would increase by $120,000. On July 1, Big Corporation borrowed $500,000 from Scotiabank to purchase equipment. Big Corporation agreed to repay the bank loan plus 4 percent interest in 6 months. Both Equipment and Bank Loan Payable would increase by $500,000. 3 4 5. On July 2, Big Corporation paid its office rent for the month of October in cash, $1,500. Cash is decreased by $1,500 while Rent Expense would increase. Expenses decrease shareholders' equity (through the Retained Earnings account). On July 5, Big Corporation paid $1,200 for a one-year insurance policy that will expire next year on June 30. Cash would decrease and another asset, Prepaid Insurance would increase [Explain to students why Prepaid Insurance would be debited and not Insurance Expense] On July 7, Big Corporation hired ten new factory employees. This is not a business transaction.