Question

Check my work Swish Watch Corporation manufactures, sells, and services expensive watches. The company has been in business for three years. At the end of the previous year, the accounting records reported total assets of $2,375,000 and total liabilities of $1,900,000. During the current year, the following summarized events occurred: 0.9 points Skipped a. Issued additional shares of common stock for $229,000 cash. b. Borrowed $246,000 cash from the bank and signed a 10-year note. C. A stockholder sold $9,000 of his stock in Swish Watch Corporation to another investor. d. Built an addition on the factory buildings for $320,000 and paid cash to the contractor. e. Purchased equipment for the new addition for $56,000, paying $18,000 in cash and signing a two-year note for the balance. f. Returned a $5,200 piece of equipment, from (e), because it proved to be defective; received a cash refund. eBook Required: Print 1. Complete the spreadsheet that follows. The first transaction is used as an example. 3. Based on beginning balances plus the completed spreadsheet, compute the following amounts. 4. At the end of the current year, has the financing for Swish Watch Corporation's investment in assets primarily come from liabilities or stockholders' equity? References Complete this question by entering your answers in the tabs below. Required 1 Required 3 Required 4 Complete the spreadsheet that follows. The first transaction is used as an example. (Enter any decreases to account balances with a minus sign.) = + Cash Assets Equipment Buildings 0 Liabilities Notes Payable 0 Stockholders' Equity Common Retained Stock Earnings 0 229,000 Beg. a. 229,000 End. Required 1 Required 3 >

Answer 1

Requirement 1:

	Assets			=	Liabilities	+	Stockholders' Equity
	Cash	Equipment	Buildings		Notes Payable		Common Stock	Retained Earnings
Beg.
a	$229,000						$229,000
b	$246,000				$246,000
c
d	($320,000)		$320,000
e	($18,000)	$56,000			$38,000
f	$5,200	($5,200)
End.	$142,200	$50,800	$320,000		$284,000		$229,000	$0

*No entry for 'transaction c' because transaction done between the investors only.

Requirement 3:

Total assets at the end of the year	2,888,000
Total liabilities at the end of the year	2,184,000
Total Stockholders' equity at the end of the year	704,000

Calculations:

Total assets at the end of previous year	2,375,000
Total assets during the year (142,200+50,800+320,000)	513,000
Total assets at the end of the year	2,888,000
Total liabilities at the end of the previous year	1,900,000
Total liabilities during the year	284,000
Total liabilities at the end of the year	2,184,000
Total assets at the end of the year	2,888,000
(less): Total liabilities at the end of year	-2,184,000
Total Stockholders' equity at the end of the year	704,000

Requirement 4:

Investment in assets primarily come from Stockholders equity because first issue in the current year is Common stock.