Fernandez & Co. experienced the following six events during the current year:

1. The sale of common stock to investors for $200,000 cash.
2. The sale of a new bond issue to investors for $400,000 cash.
3. The purchase of $20,000 of inventory for cash.
4. The purchase of $28,000 of equipment using bank financing.
5. The payment of $4,000 cash for income taxes associated with last year's operations.
6. The CFO determined that net income for the most recent month was $80,000.

Enter each of the above transactions into the balance sheet equation to show how each of the events would affect the balance sheet of Fernandez & Co.

Answer rating: 100% (QA)

SOLUTION The balance sheet equation is Assets Liabilities Equity For each of the events we need to determine how it affects the assets liabilities and ... View the full answer