Dual effects of transactions on balance sheet equation and journal entries Assume that during 2008, Inheritance Brands,
Question:
Dual effects of transactions on balance sheet equation and journal entries Assume that during 2008, Inheritance Brands, a U.S. manufacturer and distributor, engaged in the following fie transactions. Inheritance Brands applies U.S. GAAP, and reports its results in millions of U.S. dollars.
(1) The firm issues 10 million shares of $3125 par value common stock for $55 cash per share.
(2) At the end of 2008, 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 2009.
(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 2009.
(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:
b. Give the journal entries for each of the fivetransactions.
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Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... 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,...
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Inheritance Brands dual effects of transactions on balance sheet equation and journal entriesAmounts in Millions a Transaction Shareholders Number Ass...View the full answer
Financial Accounting an introduction to concepts, methods and uses
ISBN: 978-0324789003
13th Edition
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
