Question

E2-29B (book/static) The following selected events were experienced by either Cardinal Industries, Inc., a corporation, or Larry Cardinal, the major stockholder. (Click the icon to view the events.) Requirement 1. State whether each event (1) increased, (2) decreased, or (3) had no effect on the total assets of the business. Identify any specific asset affected. (If an event has no effect on the total assets of the business choose either personal transaction or asset accounts offset.) Account affected or why assets are not affected Asset effect Increased Accounts Receivable Increased Equipment Transaction a. Sold land and received a note receivable of $43,000 (the land was carried on the company's books at $43,000). b. Purchased equipment for the business for $81,000 cash. c. Cardinal used personal funds to purchase a pool table for his home d. Purchased land for a building site for the business and signed a $98,000 promissory note to the bank. e. Received $140,000 cash and issued stock to a stockholder. No effect Personal transaction Decreased Note Payable Increased Cash

Answer 1

Solution:

	Asset Effect	Account effected or why assets not effected
a. sold land and received note receivable	No Effect	Asset accounts offset
b. Purchased equipment for Cash	No Effect	Asset accounts offset
c. Cardinal used personal funds or home	No Effect	Personal Transaction
d. Purchased land for business and note signed	Increased	Land
e. Receised cash and issue stock	Increased	Cash