Any action will generate two or more entries in a balance sheet; otherwise it would fall out
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Any action will generate two or more entries in a balance sheet; otherwise it would fall out of balance. For example: If a company were to increase its cash reserves by $100,000 from funds generated in its operations, the following may be a likely outcome to the balance sheet:
For each scenario below, show the balance sheet effects for each action:
- Treat each scenario as separate transactions (i.e. do not carry #1 onto #2, etc., just recreate the table template above showing the impacts upon the balance sheet that starts with all $0’s):
- 1.The owners invest $150,000 and buys a new piece of equipment of same value
- 2.Purchase $115,000 of inventory on account (to be repaid this year)
- 3.Borrowed $85,000 in cash from the bank that it will pay back in 3 years
- 4.Buys a new truck for $42,000 for which it borrows the entire amount (to be paid back in 6 months)
- 5.Sold $120,000 in services; 25% of the sale is paid immediately in cash, with the remainder on account (to be paid within the year)
Related Book For
Computer Networking A Top-Down Approach
ISBN: 978-0133594140
7th edition
Authors: James Kurose, Keith Ross
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