An Alternate Problem on Recording the Effects of Transactions
The items making up the balance sheet of Maxx Trucking at December 31 are listed below in tabular form similar to the illustration of the accounting equation in Chapter 2 of the text.
| Assets | = | Liabilities | + | Owners’ Equity | ||||||||
| Cash | + | Accounts Receivable | + | Office Equipment | + | Trucks | = | Notes Payable | + | Accounts Payable | + | Capital Stock |
Balances | $4,700 |
| $8,300 |
| $3,000 |
| $72,000 |
| $10,000 |
| $8,000 |
| $70,000 |
During a short period after December 31, Maxx Trucking had the following transactions:
1. Bought office equipment at a cost of $2,600. Paid cash.
2. Collected $2,500 of accounts receivable.
3. Paid $2,000 of accounts payable.
4. Borrowed $5,000 from a bank. Signed a note payable for that amount.
5. Purchased three trucks for $60,000. Paid $5,000 cash and signed a note payable for the balance.
6. Sold additional stock to investors for $25,000.
Instructions
a. List the December 31 balances of assets, liabilities, and owners’ equity in tabular form as shown above.
b. Record the effects of each of the six transactions in the tabular arrangement illustrated above. Show the totals for all columns after each transaction.
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