Question

! Required information PA2-3 Recording Transactions in a Journal and T-Accounts); Preparing and Interpreting the Balance Sheet (LO 2-2, LO 2-3, LO 2-4, LO 2-5) [The following information applies to the questions displayed below.] Edward Allen Interiors Inc. is a leading manufacturer and retailer of home furnishings in the United States and abroad. The following is adapted from Edward Allen's September 30, 2016, trial balance. (The amounts shown represent millions of dollars.) Accounts Payable Accounts Receivable Cash Common Stock Equipment Inventory Notes Payable (long-term) Notes Payable (short-term) Prepaid Rent Retained Earnings Salaries and Wages Payable Software ខ្លះគនះ” | $109 10 79 376 273 160 60 3 24 20 23 45 Assume that the following events occurred in the following quarter. a. Paid $30 cash for additional inventory. b. Issued additional shares of common stock for $20 in cash. c. Purchased equipment for $170; paid $60 in cash and signed a note to pay the remaining $110 in two years. d. Signed a short-term note to borrow $10 cash. e. Conducted negotiations to purchase a sawmill, which is expected to cost $36. PA2-3 Part 2 2. Analyze transactions (a)-(e) to determine their effects on the accounting equation. (Enter any decreases to account balances with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) Assets Liabilities + Stockholders' Equity a. b. c. d.

Answer 1

Solution

	Assets		=	Liabilities		+	Stockholder's equity
a	Inventory	$      30
	Cash	$    (30)
c	Cash	$      20					Common stock	$    20
c	Equipment	$    170		Notes payable	$   110
	Cash	$    (60)
d	Cash	$      10		Notes payable	$     10
e

Transaction e will not be entered in books of account.