Analyze the Effect of the Following Transactions Using the Basic

question 60

Essay

Analyze the effect of the following transactions using the basic accounting equation and the format provided below.
i. Bought land with an estimated fair value of $150,000 by issuing 100,000 shares.
ii. Issued 10,000 common shares for $15,000 cash
iii. Purchased a 2-year insurance policy for $4,800 .
iv. Paid rent of $3,000
v. Bought equipment for $50 ,000. Paid 20% down in cash and the balance on a 5-year, 6% note
payable.
vi. Purchased $9 ,000 of merchandise inventory on credit.
vii. Paid utilities bill for $750.
viii. Sold $8,000 of merchandise inventory for $16, 000 cash.
ix. Paid $2,500 on merchandise inventory previously purchased.
x. Declared a $1,000 dividend.
xi. Recognized that 1 month of the insurance coverage had expired.

FORMAT:

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Definitions:

Government Implements

Actions taken by the government to put policies, regulations, or laws into effect.

Price Ceiling

A government-imposed limit on how high a price can be charged on a product, intended to protect consumers from high prices.

Consumers

Consumers are individuals or organizations that acquire goods and services for private purposes.

Price Control

Regulatory measures by which a government intervenes in the market to adjust prices, typically to protect consumers or producers.