During its first month of operations, March 2017, Falla Fashions, Inc. completed four transactions with the dollar effects indicated in the following schedule: 

Required: 

1. Write a brief explanation of transactions (a) through (d). Explain any assumptions that you made. 

2. Compute the ending balance in each account and prepare a classified balance sheet for Falla Fashions, Inc. at the end of March 2017. 

3. As of March 31, 2017, has most of the financing for Falla’s investment in assets come from liabilities or shareholders’ equity?

Transcribed Image Text:

DOLLAR EFFECT OF EACH OF THE FOUR TRANSACTIONS Ending Balance Accounts (a) (b) (c) (d) Cash $50,000 $(4,000) $(5,000) $(4,000) Computer Equipment 4,000 Delivery Truck Short- Term Bank 25,000 Loan 5,000 Long-Term Notes Payable 21,000 Contributed Capital 50,000