Question

Better Corp. completed the following transactions during Year 2: Purchased land for $5,000 cash. Acquired $25,000 cash from the issue of common stock. Received $75,000 cash for providing services to customers. Paid cash operating expenses of $42,000. Borrowed $10,000 cash from the bank. Paid a $5,000 cash dividend to the stockholders. Determined that the market value of the land purchased in event 1 is $35,000.

Answer 1

Transaction Analysis for Year 2 in the books of Better Corp.

1. Land $5,000 Cash $5,000

2. Cash $25,000 Common stock $25,000

3. Cash $75,000 Services Revenue $75,000

4. Operating expenses $42,000 Cash $42,000

5. Cash $10,000 Bank Note Payable $10,000

6. Dividends $5,000 Cash $5,000

7. No effect

Effect of Each Transaction on the Accounting Equation:

Transaction                   Accounting Equation

                     Assets         =        Liabilities    +   Stockholders Equity

1.    $5,000  -$5,000       =        $0               +     $0

2.                $25,000       =        $0                +    $25,000

3.                $75,000       =        $0                +    $75,000

4.              -$42,000       =         $0                +  -$42,000

5.               $10,000        =       $10,000        +    $0

6.               -$5,000        =        $0                 +  -$5,000

               $63,000         =      $10,000         +    $53,000

Thus, the accounting equation shows that assets are equal to liabilities and equity.

Learn more about the accounting equation at brainly.com/question/23920579