Question

The following events occurred for Favata Company a. Received $12,000 cash from owners and issued stock to them. b. Borrowed $9,000 cash from a bank and signed a note due later this year. C. Bought and received $1,000 of equipment on account. Purchased land for $16,000; paid $1,400 in cash and signed a long-term note for $14,600 Purchased $5,000 of equipment, paid $1,400 in cash and charged the rest on account Required: For each of the events (a) through (e), perform transaction analysis and indicate the account, amount, and direction of the effect (+ for increase and for decrease) on the accounting equation (Enter any decreases to account balances with a minus sign.) Assets Liabilities

Answer 1

	Assets		=	Liabilities		+	Stockholders' Equity
a.	Cash	12,000	=			+	Common stock	12,000
b.	Cash	9,000	=	Notes payable	9,000	+
c.	Equipment	1,000	=	Accounts payable	1,000	+
d.	Land	16,000	=	Notes payable	14,600	+
	Cash	-1,400	=			+
e.	Equipment	5,000	=	Accounts payable	3,600	+
	Cash	-1,400	=			+