Bearings & Brakes Corporation (B& B) was incorporated as a private company. The company’s accounts included the following at June 30:
During the month of July, the company had the following activities:
a. Issued 6,000 shares of common stock for $ 600,000 cash.
b. Borrowed $ 60,000 cash from a local bank, payable in four years.
c. Bought a building for $ 166,000; paid $ 66,000 in cash and signed a three- year note for the balance.
d. Paid cash for equipment that cost $ 90,000.
e. Purchased supplies for $ 90,000 on account.
1. Analyze transactions (a)–(e) to determine their effects on the accounting equation. Use the format shown in the demonstration case on page 69.
2. Record the transaction effects determined in requirement 1 using a journal entry format.
3. Summarize the journal entry effects from requirement 2 using T- accounts.
4. Prepare a trial balance at July 31.
5. Prepare a classified balance sheet at July 31.
6. As of July 31, has the financing for B& B’s investment in assets primarily come from liabilities or stockholders’ equity?

  • CreatedNovember 02, 2015
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