Chapter_2_HW_Solution_final

Chapter_2_HW_Solution_final - AEM 221 Financial Accounting...

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AEM 221 Financial Accounting Spring 2007 Chapter 2 Homework Solution E2-4 Determining Financial Statement Effects of Several Transactions LO3 The following events occurred for Pinto Company: a. Received investment of $23,000 cash by organizers and distributed stock to them. b. Borrowed $6,000 cash from a bank. c. Purchased $12,000 in land; paid $3,000 in cash and signed a mortgage note for the balance. d. Loaned $500 to an employee who signed a note. e. Purchased $8,000 of equipment, paying $1,500 in cash and signing a note for the rest. For each of the events ( a ) through ( e ), perform transaction analysis and indicate the account, amount, and direction of the effect on the accounting equation (+ for increase, - for decrease, none for no affect). Check that the accounting equation remains in balance after each transaction. Assets = Liabilities + Stockholders' Equity a. Cash 23,000 + None 0 None Contributed capital 23,000 + b. Cash 6,000 + Note payable 6,000 + None 0 None c. Land 12,000 + Mortgage note payable 9,000 + None 0 None Cash 3,000 - None 0 None None 0 None d. Note receivable 500 + None 0 None None 0 None Cash 500 - None 0 None None 0 None e. Equipment 8,000 + Notes payable 6,500 + None 0 None Cash 1,500 - None 0 None None 0 None E2-11 Recording Journal Entries LO4 1
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Evans Corporation was organized on May 1, 2008. The following events occurred during the first month. a. Received $50,000 cash from the three investors who organized Evans Corporation. b. Borrowed $15,000 cash and signed a note due in two years. c. Purchased $10,000 in equipment, paying $1,000 in cash and signing a six-month note for the balance. d. Ordered store fixtures costing $15,000.
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