1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
noname [10]
3 years ago
11

A. The owner invested $16,200 cash in the company in exchange for its common stock.

Business
1 answer:
Anon25 [30]3 years ago
7 0

Answer:

a. Assets increase by $16,200; and Shareholders' equity increases by $16,200.

b. Assets increase by $800; and Assets decrease by $800.

c. Assets increase by $10,600; and Shareholders' equity increases by $10,600.

d. Assets increase by $260; and Liabilities increases by $260.

e. Assets increase by $9,600; and Assets decrease by $9,600.

Explanation:

The accounting equation that is impacted is given as follows:

Assets = Shareholders' equity + Liabilities

The impact of each transaction on individual items of the accounting equation are as follows:

a. The owner invested $16,200 cash in the company in exchange for its common stock.

Cash is an asset item, current asset to be specific; while common stock is one of the components of Shareholders' equity. The investment of $16,200 by the owner will therefore increase assets and Shareholders' equity.

Therefore, Assets increase by $16,200; and Shareholders' equity increases by $16,200.

b. The company purchased supplies for $800 cash.

Cash and supplies are both assets item, current assets to be specific. The purchase of supplies will increase the inventory of supplies which is an asset item by $800, while it will reduce cash which is another asset item also by $800.

Therefore, Assets increase by $800; and Assets decrease by $800.

c. The owner invested $10,600 of equipment in the company in exchange for more common stock.

Equipment is an assets item, fixed assets to be specific; while common stock is one of the components of Shareholders' equity. The investment of $10,600 worth of equipment by the owner will therefore increase assets and Shareholders' equity each by $10,600.

Therefore, Assets increase by $10,600; and Shareholders' equity increases by $10,600.

d. The company purchased $260 of additional supplies on credit.

Supplies is an assets item, current assets to be specific; while purchase on credit is a liability item, current liability which is an account payable to creditor of supplies. The purchase of supplies will increase supplies which is an assets item by $260, and it will also increasethe account payables to creditor of supplies.

Therefore, Assets increase by $260; and Liabilities increases by $260.

e. The company purchased land for $9,600 cash.

Cash and land are both assets item, current assets to be specific. The purchase of land will increase the inventory of land which is a fixed asset item by $9,600, while it will reduce cash which is another asset (current asset) item also by $9,600.

Therefore, Assets increase by $9,600; and Assets decrease by $9,600.

You might be interested in
Does Caroline have any closed accounts? How long does a closed account stay on a persons credit report?
Elden [556K]
It stays on for seven years.
3 0
2 years ago
Read 2 more answers
Shockglass Company had a beginning inventory of $15,000. During the year, the company recorded inventory purchases of $45,000 an
Otrada [13]

Answer:

A. $10,000

Explanation:

We know that :

cost of goods sold = opening inventory + purchases - ending inventory

hence,

Ending Inventory = opening inventory + purchases - cost of goods sold

therefore,

Ending Inventory = $15,000 +  $45,000 - $50,000

                              = $10,000

The ending inventory must equal: $10,000

8 0
2 years ago
Suppose a company is financed with $20 million of equity and $60 million of debt. That is, the company obtained $20 million from
alexgriva [62]

Answer:

Existing Equity = 20 million

Existing debt = 60 million

Total capital = 20 million + 60 million = 80 million

a. Given company issued 30 million of equity to retire debt

Equity after raise = $20 million + $30 million = $50 million

Debt = $60 million - $30 million = $30 million

Total capital size remain at $80 million

Capital structure, Equity = $50 million/$80 million = 0.625 = 62.50%

Debt = (1-0.625) = 0.375 = 37.50%

b. The market would welcome the new issue as the risk of  the firm would be reduced.

6 0
2 years ago
X-Mart purchased $300 of merchandise and paid immediately. Demonstrate the journal entry to record this transaction, assuming th
tangare [24]

Answer:

See explanation Section

Explanation:

The journal entry to record the purchase of merchandise -

Merchandise Inventory          Debit        $300

Cash                                         Credit           $300

Note: As the perpetual inventory shows the running inventory of cost of goods available for sale. Therefore, every purchase of merchandise will directly debit the merchandise inventory and not the purchase account. Since the company paid immediately, cash decreased.

5 0
3 years ago
The cost of the merchandise inventory that the business ▼ has sold to customers.
Ivan

c a type of marchandiser that buys merchadise from a manufacture


8 0
3 years ago
Other questions:
  • True or false, careers cannot be built from and number of jobs, only a select few
    5·1 answer
  • What makes you blush hard?
    12·1 answer
  • A managerial accounting team is working with a production manager to determine the cause of unexpected production delays. Based
    13·1 answer
  • In lean operations, input resources arrive for processing only after the preceding batch has been completed. question 10 options
    8·1 answer
  • The business case for why companies should act in a socially responsible manner includes such reasons as A. it generates interna
    10·1 answer
  • A monopolist sells in two geographically divided markets, the East and the West. Marginal cost is constant at $50 in both market
    5·1 answer
  • AP North Company has completed all of its operating budgets. The sales budget for the year shows 50,000 units and total sales of
    5·1 answer
  • Apple's products are well known and valued because the demand, customer loyalty, and company's price premium rank high in the co
    10·1 answer
  • How does the scope of american government compare to the scope of government in other countries?
    9·1 answer
  • The starch classification that consists of the percentage of people who remembered having previously seen the advertisement in t
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!