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recording transactions in a journal and t accounts preparing and interpreting the ba 727117

Recording Transactions (in a Journal and T Accounts); Preparing and Interpreting the Balance Sheet Bearings & Brakes Corporation (B&B) was incorporated as a private company on June 1, 2010. The company’s accounts included the following at June 30, 2010:

Accounts Payable

$ 50,000

Land

$444,000

Factory Building

500,000

Notes Payable

5,000

Cash

90,000

Retained Earnings

966,000

Contributed Capital

170,000

Supplies

9,000

Equipment

148,000

 

 

During the month of July, the company had the following activities:

a. Issued 6,000 shares of stock for $600,000 cash.

b. Borrowed $60,000 cash from a local bank, payable June 30, 2012.

c. Bought a factory building for $166,000; paid $66,000 in cash and signed a three year note for the balance.

d. Paid cash for equipment that cost $90,000.

e. Purchased supplies for $90,000 on account.

Required:

1. Analyze transactions ( a )–( e ) to determine their effects on the accounting equation. Use the format shown in the demonstration case on page 68.

2. Record the transaction effects determined in requirement 1 using a journal entry format.

3. Summarize the journal entry effects from requirement 2 using T accounts.

4. Prepare a classified balance sheet at July 31, 2010.

5. As of July 31, 2010, has the financing for B&B’s investment in assets primarily come from liabilities or stockholders’ equity?

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