Question

.     Record the following transactions in the financial statements effects template below.

1. Founder contributes $44,000 in cash in exchange for common stock.
2. Obtain $26,000 short-term bank loan.
3. Purchase equipment costing $24,000 for cash.
4. Purchase inventory costing $14,000 on account.

Balance Sheet

Income Statement

Transaction

Cash Asset

+

Noncash Assets

=

Liabil- ities

+

Contrib. Capital

+

Earned Capital

Rev-enues

–

Expen-ses

=

Net Income

a)

=

–

=

b)

=

–

=

c)

=

–

=

d)

=

–

=

Answer 1

Following is the financial statements effect template as updated by transactions given :-

Transaction	balance sheet									Income statement
	Cash Asset	+	Non Cash Asset	=	liabilities	+	contributed capital	+	earned capital	revenues	-	Expenses	=	net income e
a) .	44000	+	0	=	0	+	44000	+	0	0	-	0	=	0
b) .	26000	+	0	=	26000	+	0	+	0	0	-	0	=	0
c) .	(24000)	+	24000	=	0	+	0	+	0	0	-	0	=	0
d) .	0	+	14000	=	14000	+	0	+	0	0	-	0	=	0