Question

The following are the transactions of Spotlighter, Incorporated, for the month of January. a. Borrowed $4,390 from a local bank on a note due in six months. b. Received $5,080 cash from investors and issued common stock to them. c. Purchased $1,900 in equipment, paying $650 cash and promising the rest on a note due in one year. d. Paid $750 cash for supplies. e. Bought and received $1,150 of supplies on account.

Answer 1

Answer:

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a.

(A) Cash +4,940

(L) Notes payable (short-term) +4,940

b.

(A) Cash +5,630

(S) Common Stock +5,630

c.

(A) Cash -1,200

(A) Equipment +3,000

(L) Notes payable (short-term) +1,800

d.

(A) Cash -1,300

(A) Supplies +1,300

e.

(A) Supplies +1,700

(L) Accounts payable +1,700

Explanation:

(A) = Assets  

(L) = Liabilities

(S) = Stockholders' Equity

(A) = (L) + (S)

Transaction a.

(A) Cash +4,940

(L) Notes payable (short-term) +4,940

Transaction b.

(A) Cash +5,630

(S) Common Stock +5,630

Transaction c.

(A) Cash -1,200

(A) Equipment +3,000

(L) Notes payable (short-term) +1,800

Transaction d.

(A) Cash -1,300

(A) Supplies +1,300

Transaction e.

(A) Supplies +1,700

(L) Accounts payable +1,700