Question

Chap 2 HW (graded) Help Save & Exit Submit Check my work E2-5 (Algo) Determining Financial Statement Effects of Several Transactions LO 2-1, 2-3 Cannon Sporting Goods is one of the world's leading manufacturers of athletic shoes and sports apparel. The following activities occurred during a recent year. The amounts are rounded to millions, except for par value. points ebook Hint a. Purchased additional buildings for $178 and equipment for $280: paid $404 in cash and signed a long-term note for the rest. b. Issued 120 shares of $2 par value common stock for $350 cash. c. Declared $145 in dividends to be paid in the following year. d. Purchased additional short-term investments for $7,716 cash. e. Several Cannon Sporting Goods investors sold their own stock to other investors on the stock exchange for $84, [ Sold $4,113 in short-term investments for $4,113 in cash. Print References Required: For each of the events (a) through (1. perform transaction analysis and indicate the account, amount and direction of the effect (+ for increase and for decrease) on the accounting equation. Check that the accounting equation remains in balance after each transaction (If no impact on the accounting equation leave cells blank. Enter your answers in millions.) Assets + Stockholders' Equity Event a. Liabilities Notes payable long-term) 54 Buildings Equipment Cash Tcash 178 280 (404) 350 b. Common stock Additional paid in capital Dividends payable 145 Retained earnings

Answer 1

In this question, we have to calculate ASSETS = LIABILITIES + STOCKHOLDER'S EQUITY

Now, we have to solve this question by solving Journal Entries first.

   Journal Entries

Debit Credit

a) Building A/c Debit Equipment A/c Debit Cash A/c Credit Notes Payable A/c Credit (Balancing Figure)	178 280	404 54
b) Cash A/c Debit Common Stock A/c Credit Additional paid up Capital A/c Credit	350	240 110
c) Retained Earnings A/c Debit Dividend Payable A/c Credit	145	145
d) Short Term Investment A/c Debit Cash A/c Credit	7716	7716
e) No Journal entry required
f) Cash A/c Debit    Short Term Investment A/c Credit	4113	4113

Now, we have to solve the Equation i.e. ASSETS = LIABILITIES + STOCK HOLDER'S EQUITY

EVENTS ASSETS = LIABILITIES + STOCKHODER'S EQUITY

a)	Building	178		Notes Payable	54
	Equipment	280
	Cash	(404)
b)	Cash	350					Common Stock	240
							Additional paid up	110
c)				Dividend Payable	145		Retained Earnings	(145)
d)	Short Term Invest.	7716
	Cash	(7716)
e)	No Transaction
f)	Cash	4113
	Short Term Invest.	(4113)
	Total Assets	404		Total Liabilities	199	+	Total Equity	205

Hence, Equation Solved

ASSETS = LIABILITIES + SHAREHOLDER'S EQUITY

404 = 199 + 205

404 = 404

ASSETS = LIABILITIES

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