Question

Grizzly Co. enters into the following transactions: • Stockholders contribute $25,000 cash to a company in exchange for common stock. • The company purchases $12,500 of new equipment in exchange for its promise to pay $12,500 at the end of next month. The company pays $7,500 to suppliers on account. Required: a. Show the effect of these transactions on the basic accounting equation. b. Prepare the journal entries that would be used to record the transactions. Complete this question by entering your answers in the tabs below. Required A Required B Show the effect of these transactions on the basic accounting equation. (Enter any decreases to account balances with a minus sign.) Transaction Analysis Liabilities Assets + Stockholders' Equity a. b. C. < Required A Required B >

Answer 1

[mizzly co Required A Transachon Analysis Liabilities + Shame holdet equity 2 Soob Assets Common stocle 25 000 @) cash 12500 12 SUU Note payable b) Equipment 7500 1-7500 Accounts payable cash Requiered-b [arizzly co] Torunsaching General journal Desit (reelt cash a) 25000 Common Stoce 25000 125oo Equipment 125oo Note payable 7500 0 Accounts payable Cash 7500

Requirement-A share holden's equily Liabilities Asset Loan 3200 3200 cash Notes payable 4000 4000 b) < Equipment Cash -2400 Accounts payable 2400 1200 -1200 Notes payable d) Cash Requinement B transachon General journal Debit (reelt 3200 a) cash 32oo Loan 4000 b) Equipment Notes payable 4000 2400 Allounts payable Cash 2400 1200 زه Notres payable cash 1200

T- Accounts Cash loso Bes. Balanie Nil () equipment d) Supplies 1150 4790 a) Note payable 5 Common Stock 5480 End Balanie 8070 Com ) 10270 10270 Equipment mil Be Balance c) cash loso 1650 - Notes payable End Balanie 2700 [or 2700 2700 Notes payable (short tom) Beg Balanie Nil a) cash 4790 () equipment 1650 End Balance 6440 16440 6440

Supplies Nil Bg. Balance d) cash 1150 e) Accounts payable 1550 End Balance 270o con 2700 2700 Accounts payable Beg. Balance NI e supplies Isso End Balance 155o 1550 155o Common sobue B. Balance b) Cash 5480 End Balance 5480 [cr] 5450 5480