4. Paid expenses amounting to $21,400
5. Purchased a plot of land for $22,000 cash
6. Paid a dividend of $15,000 to its stockholders
7. Repaid $12,000 of the loan listed in number 2
Required:
a. Fill in the headings to the accounting equation shown below.
b. Show the effects of the above transactions on the accounting equation.
________ = ________ + ________
Event Number
1.
2.
3.
4.
5.
6.
7.
Accounting Equation
(a) and (b)
Assets = Liabilities + SH Equity
1. 25,000 25,000
2. 18,000 18,000
3. 28,000 28,000
4. (21,400) (21,400)
5. 22,000
(22,000)
6. (15,000) (15,000)
7. (12,000) (12,000)
References
Essay Difficulty: 2 Medium Learning Objective: 01-04 Show how business events affect the
accounting equation.
43.
Award: 10.00 points
44.
Award: 10.00 points
Each of the following requirements is independent of the others.
a. Valdez Corporation has liabilities of $95,000 and stockholders’ equity of $115,000. What is the amount of Valdez's assets?
b. Global Company has assets of $320,000 and liabilities of $95,000. What is the amount of Global's stockholders’ equity?
c. Brown Company has assets of $90,000 and liabilities of $25,000. What is the amount of Brown's claims?
a. Liabilities + Stockholders’ equity = Assets. Assets = $95,000 + 115,000 = $210,000.
b. Assets − Liabilities = Stockholders’ equity; Stockholders’ equity = $320,000 − 95,000 = $225,000.
c. Liabilities and Stockholders’ equity = Claims. If assets are $90,000, then liabilities plus stockholders’ equity = $90,000. Total amount of claims = $90,000.
References
Essay Difficulty: 2 Medium Learning Objective: 01-04 Show how business events affect the
accounting equation.
The following events occurred for Ringgold Company during Year 1, its first year of operations:
1. Issued stock to investors for $45,000 cash
2. Borrowed $25,000 cash from the local bank
3. Provided services to its customers and received $32,000 cash
4. Paid expenses of $28,000
5. Paid $22,000 cash for land
6. Paid dividend of $12,000 to stockholders
7. Repaid $10,000 of the loan listed in item 2
Required:
Show the effects of the above transactions on the accounting equation, below. Include dollar amounts of increases and decreases. Enter NA for items not
affected. If one section is affected by an increase and also a decrease, enter each part on a separate line.
The first event is done for you. After entering all the events, calculate the total amounts of assets, liabilities, and stockholders’ equity at the end of the year.
Event number Assets = Liabilities + SH Equity
1. 45,000 NA 45,000
2.
3.
4.
5.
6.
7.
Total
Event number Assets = Liabilities + SH Equity
1. 45,000 NA 45,000
2. 25,000 25,000 NA
3. 32,000 NA 32,000
4. (28,000) NA (28,000)
5. 22,000 NA NA
(22,000) NA NA
6. (12,000) NA (12,000)
7. (10,000) (10,000) NA
Total 52,000 15,000 37,000
References
Essay Difficulty: 2 Medium Learning Objective: 01-04 Show how business events affect the
accounting equation.
45.
Award: 10.00 points
Ramirez Company experienced the following events during Year 1:
1. Acquired $50,000 cash by issuing common stock
2. Borrowed $25,000 cash from a creditor
3. Provided services to customers for $38,000 cash
4. Paid $32,000 cash for operating expenses
5. Paid a cash dividend of $2,500 to stockholders
6. Purchased land with cash, $30,000
Required:
a. Show how each of these events affects the accounting equation. Enter NA for items not affected. The first event is done as an example.
b. Calculate the total amount of assets, liabilities, common stock, and retained earnings at the end of the period.
Event