Assume that during Year 14, Inheritance Brands, a U.S. manufacturer and distributor, engaged in the following five

Question:

Assume that during Year 14, Inheritance Brands, a U.S. manufacturer and distributor, engaged in the following five transactions. Inheritance Brands applies U.S. GAAP and reports its results in millions of U.S. dollars ($). You may round to one significant digit after the decimal point. (1) The firm issues 10 million shares of $3.125 par value common stock for $55 cash per share.

(2) At the end of Year 14, the firm acquires land costing $250 million and a building costing $900 million. It pays for the purchase by giving $400 million in cash and promising to pay the remainder in Year 15. It signed a note payable for the remainder.

(3) The firm pays $30 million cash for a one-year insurance policy on the land and building.

The policy period begins at the start of Year 15.

(4) The firm acquires merchandise inventory costing $400 million on account from various suppliers.

(5) The firm pays cash to the suppliers in transaction (4) for its purchases on account.

a. Indicate the effects of these five transactions on the balance sheet equation using this format:

Assume that during Year 14, Inheritance Brands, a U.S. manufacturer

b. Give the journal entries for each of the fivetransactions.

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Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...