Peta Plastics Company has been operating for three years as a sole proprietorship owned and managed by James Peta. The December 31, 2009, account balances are:

During the year 2010, the company had the following summarized activities:

(a) Purchased equipment that cost $20,000; paid $5,000 cash and signed a two-year note for th e balance.

(b) Received an additional $20,000 cash investment from James Peta.

(c) Borrowed $30,000 cash from a local bank, payable June 30, 2015.

(d) Purchased $4,000 of additional supplies on account.

(e) Built an addition to the factory for $41,000; paid $12,000 in cash and signed a three-year note for the balance.

(f) Hired a new employee to start January 1, 2011, at an annual salary of $35,000.

Required:

1. Analyze transactions (a)-(f) to determine their effects on the accounting equation. Use the format shown in the demonstration case on page 71.

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 classified balance sheet at December 31, 2010.

5. As of December 31, 2010, has the financing for Peta Plastics Company's assets primarily come from liabilities or owner's equity?