Bellamy Inc

question 42

Short Answer

Bellamy Inc. began operations in April of the current year with the following transactions occurring during the month:
Apr 1 Sold 15,000 common shares for $13 per share.
2 Paid $6,300 for three months' rent in advance.
5 Purchased $25,000 of equipment paying 25% down and agreeing to pay the balance in two years.
6 Purchased inventory for $19,000 on credit.
10 Sold on account $16,000 of inventory for $23,000.
15 Paid wages of $1,200.
20 Collected $8,000 from customers on account.
25 Paid suppliers $3,000 on account.
31 Paid wages of $1,100.
31 Recognized one month's rent expense.
31 Recognized one month's equipment depreciation expense. The estimated salvage value is $4,000 and the estimated useful life is 5 years.
Instructions
Indicate the effects of these transactions on the balance sheet equation.

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Definitions:

Time Period Assumption

The accounting principle that allows the life of a company to be divided into time periods, such as months or years, for reporting purposes.

Company Life

A conceptual term generally referring to the length of time a company has been in business or is expected to operate.

Dodd-Frank Act

A comprehensive and complex piece of financial regulation in the United States, enacted in 2010 to prevent the recurrence of financial crises.

Clawback

A provision under which money already paid must be returned, often used in employment contracts for the return of bonuses or in investment agreements.