Teaching suggestion - Walk students through the following transaction analysis. 1. 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. 6 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. On July 9, Big Corporation purchased advertising materials on account from Grand Office Supplies for $3,500. Both Supplies and Accounts Payable would increase by $3,500 7. On July 13, Big Corporation shipped $240,000 of products to Big Retailing Ltd. A bill is sent to Big Retailing Ltd. for these services. Accounts Receivable is increased indicating an increase in the amount owed by Big Retailing Ltd to Big Corporation. Product Acva Go ED