The Campbell Company Began Operations on January 1, Year 1

question 152

Essay

The Campbell Company began operations on January 1, Year 1 and on that date issued $60,000 of common stock for cash. In addition, the company borrowed $40,000 from the bank. It provided services to its customers during Year 1 and received $72,000 cash. During the year, it paid $80,000 cash for land, $50,000 for salaries, and $10,000 in cash dividends to the stockholders.
Required: Write an accounting equation and record the effects of each transaction under the appropriate heading. (Use specific accounting titles below the statement elements.) Enter 0 for items not affected.Prepare an income statement and a balance sheet for the Year 1 accounting period.

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Definitions:

Diamond Rings

Jewelry pieces featuring diamonds set in a metal band, commonly used as tokens of engagement or marriage.

GDP Deflator

A gauge for the cost levels of all newly produced, domestic, consumable goods and services in a national economy.

CPI

Consumer Price Index; a measure that examines the weighted average of prices of a basket of consumer goods and services, typically used as an indicator of inflation.

CPI

Short for Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.