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The following events occurred for Johnson Company: a. Received investment of cash by organizers and distributed to them 1,030 shares of $1 par value common stock with a market price of $20 per share. b. Purchased $7,300 of equipment, paying $1,400 in cash and owing the rest on accounts payable to the manufacturer. c. Borrowed $15,000 cash from a bank. d. Loaned $1,100 to an employee who signed a note. e. Purchased $24,458 of land: paid $6,000 in cash and signed a mortgage note for the balance. For each of the events (a) through (e), perform transaction analysis and indicate the account, amount, and direction of the effect (+ for increase and – for decrease) on the accounting equation. Check that the accounting equation remains in balance after each transaction. (If no impact on accounting equation leave cells blank.)
Expert Answer
ANSWER:
| Assets | = | Liabilities | + | Stockholders’ Equity | |||||
|
Cash | 20600 | Common Stock | 1030 | |||||
| Additional paid in capital | 19570 | ||||||||
| b. | Equipment | 7,300 | Notes Payable | 5,900 | |||||
| Cash | -1400 | ||||||||
|
Cash | 15,000 | Notes Payable | 15,000 | |||||
| d. | Note receivable | 1,100 | |||||||
| Cash | -1,100 | ||||||||
|
|
|||||||||
| e. | Land | 24,458 | Mortgage Notes Payable | 18,458 | |||||
| Cash | -6,000 |
