Listed Below Are the Transactions for Clowns and Magic Company

question 58

Essay

Listed below are the transactions for Clowns and Magic Company Limited. For each transaction, determine the amount and the effect on the accounting equation.
1. Purchased a special magic machine for $2,000, making a 20% down payment in cash, the remainder is on account.
2. Purchased $350 in magic supplies for cash.
3. Billed customers $1,500 for magic shows.
4. Purchased portable magic machine for children's event for $500, fully financed by a bank loan.
5. Collected $800 from customers for services previously billed.
6. Paid balance owing on special magic machine.
7. Incurred travel expenses of $85 on account.
8. Completed party services for customers who pay $440 cash.
9. Paid $1,250 in wages to employees.

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Definitions:

Stock Split

Issuing of additional shares of stock to stockholders; total par or stated value remains the same.

Par Value

The face value of a bond or stock, representing the amount to be returned to the bondholder at maturity or the value assigned to a share of stock for accounting purposes.

Stock Split

A corporate action to increase the number of shares, reducing the price per share correspondingly without changing the market capitalization.

Par Value

A nominal value given to a security or stock specified by the issuing company, which may not necessarily reflect its actual market value.