Question

1. Issued 54,000 shares of common stock in exchange for $540,000 in cash. 2. Purchased equipment at a cost of $88,000. $22,000 cash was paid and a notes payable to the seller was signed for the balance owed. 3. Purchased inventory on account at a cost of $164,000. The company uses the perpetual inventory system 4. Credit sales for the month totaled $240,000. The cost of the goods sold was $144,000. 5. Paid $7.250 in rent on the warehouse building for the month of March 6. Paid $7.600 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2021 7. Paid $144,000 on account for the merchandise purchased in 3. 8. Collected $108,000 from customers on account. 9. Recorded depreciation expense of $2,200 for the month on the equipment. Required: Analyze each transaction and show the effect of each on the accounting equation for a corporation (Amounts to be deducted should be indicated by a minus sign. Enter the net change on the accounting equation.) - Liabilities - Retained Earnings Assets 540.000 Paid In Capital 540,000 CON

Answer 1

ACCOUNTING EQUATION
SN	ASSETS	=	LIABILITIES	+	PAID OF CAPITAL	+	RETAINING EARNING
1	540000				540000
2	88000		66000
	-22000
3	164000		164000
4	240000						96000
	-144000
5	-7250						-7250
6	7600
	-7600
7	-144000		-144000
8	108000
	-108000
9	-2200						-2200