Question

E2-4 Determining Financial Statement Effects of Several Transactions (L01, LO2) The following events occurred for Favanta Company a. Received $10,000 cash from owners and issued shares to them. b. Borrowed $7,000 cash from a bank and signed a note due later this year. c. Purchased land for $12,000; paid $1,000 in cash and signed a note for the $11,000 d. Bought and received $800 of equipment on account. e. Purchased $3,000 of equipment, paying $1,000 in cash and charged the rest on account by signing a note payable 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 ne accounting equation Check that the accounting equation remains in balance after each transaction. (Enter any decreases to account balances with a minus sign.) Shareholders' Equity Liabilities Assets 10 000 Event 10.000 a b d e Score answer < Prev 2 06 60 ENG G O HI be here to search

Answer 1

Event	Assets		=	Liabilities		+	Shareholders' Equity
a.	Cash	$ 10,000					Common stock	$ 10,000
b.	Cash	$ 7,000		Notes payable	$ 7,000
c.	Land	$ 12,000
	Cash	($ 1,000)		Notes payable	$ 11,000
d.	Equipment	$ 800		Accounts payable	$ 800
e.	Equipment	$ 3,000
	Cash	($ 1,000)		Notes payable	$ 2,000
Totals		$ 30,800	=		$ 20,800	+		$ 10,000