Question

Required information (The following information applies to the questions displayed below.) Edward Allen Interiors Inc. is a leading manufacturer and retailer of home furnishings in the United States and abroad. The following is adapted from Edward Allen's September 30, 2016, trial balance. (The amounts shown represent millions of dollars.) $ 152 22 124 39 335 Accounts Payable Accounts Receivable Cash Common Stock Equipment Inventory Notes Payable (long-term) Notes Payable (short-term) Prepaid Rent Retained Earnings Salaries and Wages Payable Software 160 195 41 357 32 95 Assume that the following events occurred in the following quarter. a. Paid $30 cash for additional inventory. b. Issued additional shares of common stock for $25 in cash. c. Purchased equipment for $210; paid $100 in cash and signed a note to pay the remaining $110 in two years. d. Signed a short-term note to borrow $13 cash. e Conducted negotiations to purchase a sawmill, which is expected to cost $46.

Answer 1

Accounting equation (amounts in millions $)	assets	=	liabilities	+	stockholders equity
a.	purchase of inventory (+30-30)	0
b.	shares issued for cash	25				25
c.	purchase of equipment for cash and long-term note(equipment 210l ess cash 100; note 110)	110		110
d.	short-term note	13		13
e.	no effect
balance	148		123		25

Transaction	General Journal	Debit		Credit
a.	Inventory	30
	To Cash			30
	(being purchase of inventory)
b.	Cash	25
	To Stockholders equity			25
	(being shares issued for cash)
c.	Equipment	210
	To Cash			100
	To Notes payable			110
	(being purchase of equipment with cash and notes payable)
d.	Cash	13
	To Notes payable			13
	(being borrowings in notes payable)
e.	no effect

All the below amounts are in millions in $

cash
beg.bal	124	inventory	30
common stock	25	equipment	100
notes payable (short-term)	13	end.bal	32
total	162	total	162
accounts receivable
beg.bal	22	end.bal	22
total	22	total	22
equipment
beg.bal	335
cash	100
notes payable (long-term)	110	end.bal	545
total	545	total	545
inventory
beg.bal	160
cash	30	end.bal	190
total	190	total	190
prepaid rent
beg.bal	41	end.bal	41
total	41	total	41

common stock
		beg.bal	39
end.bal	64	common stock	25
total	64	total	64
notes payable (long-term)
		beg.bal	195
end.bal	305	cash	110
total	305	total	305
notes payable (short-term)
		beg.bal	2
end.bal	15	cash	13
total	15	total	15
retained earnings
end.bal	357	beg.bal	357
total	357	total	357

salaries and wages payable
end.bal	32	beg.bal	32
total	32	total	32
software
beg.bal	95	end.bal	95
total	95	total	95

Edward Allen Interiors
Balance Sheet
as of Dec 31, 2016 (amount in millions $)
assets:
cash	32
accounts receivable	22
prepaid rent	41
inventory	190
equipment	545
software	95
total assets		925
liabilities:
notes payable	15
accounts payable	152
salaries and wages payable	32
notes payable (long-term)	305
common stock	64
retained earnings	357
total liabilities		925