Perry Real Estate Co. experienced the following events during the organizing phase and its first month of operations. Some of the events were personal for the stockholders and did not affect the business. Others were transactions of the business.

Required
1. Classify each of the preceding events as one of the following:
a. A business-related event but not a transaction to be recorded by Perry Real Estate Co.
b. A personal transaction for a stockholder, not to be recorded by Perry Real Estate Co.
c. A business transaction to be recorded by Perry Real Estate Co.
2. Analyze the effects of the preceding events on the accounting equation of Perry Real Estate Co. Use a format similar to that in Exhibit 2-1, Panel B.
3. Record the transactions of the business in its journal. Include an explanation for each entry.

Transcribed Image Text:

Gaylord Perry, the major stockholder of real estate company, received $50,000 cash from an inheritance. Perry deposited $50,000 cash in a new business bank account titled Perry Real Estate Co. The business issued common stock to Perry Nov. 4 5 6 The business paid $300 cash for letterhead stationery for the new office. 7 The business purchased office equipment. The company paid cash of $30,000 and agreed to pay the account pa yable for the remainder, $7,000, within 3 months. Perry sold Dell stock, which he had owned for several years, receiving $75,000 cash from his personal stockbroker Perry deposited the $75,000 cash from sale of the Dell stock in his personal bank account. A representative of a large company telephoned Perry and told him of the company's intention to transfer $10,000 of business to Perry Perry finished a real estate deal for a client and submitted his bill for services, $10,000. Perry expects to collect from this client within 2 weeks. The business paid half its account payable for the equipment purchased on Novem ber 7 The business paid office rent of $4,000 The business declared and paid a cash dividend of $2,000. 10 11 12 18 21 25 30