Question

7. Issued 56,000 shares of common stock in exchange for $560,000 in cash. 2. Purchased equipment at a cost of $92,000. $23,000 cash was paid and a notes payable to the seller was signed for the balance owed. 3. Purchased inventory on account at a cost of $170,000. The company uses the perpetual inventory system. 4. Credit sales for the month totaled $250,000. The cost of the goods sold was $150,000. 5. Paid $7,500 in rent on the warehouse building for the month of March. 6. Paid $7,750 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2021. 7. Paid $150,000 on account for the merchandise purchased in 3. 8. Collected $112,500 from customers on account. 9. Recorded depreciation expense of $2,300 for the month on the equipment Required: Analyze each transaction and show the effect of each on the accounting equation for a corporation. (Amounts to be deducted should be indicated by a minus sign. Enter the net change on the accounting equation.) Retained Earnings Liabilities Assets 560,000 Paid In Capital 4560,000 1 ON 6 7 8 Next

Answer 1

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Event	Asset	=	Liabilities	+	Paid In Capital	+	Retained Earnings
1	560,000.00	=		+	560,000.00	+
2	69,000.00	=	69,000.00	+		+
3	170,000.00	=	170,000.00	+		+
4	100,000.00	=		+		+	100,000.00
5	(7,500.00)	=		+		+	(7,500.00)
6	-	=		+		+
7	(150,000.00)	=	(150,000.00)	+		+
8	-	=		+		+
9	(2,300.00)	=		+		+	(2,300.00)
End Bal.	739,200.00	=	89,000.00	+	560,000.00	+	90,200.00