Question $6$

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 blank 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$)$

$3.$ Borrows $$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$)$

$5.$ Sells $$120,000$ in services; $25\%$ of the sale is paid immediately in cash, with

the remainder on account $($to be paid within the year$)$

HW$1-$ Q$6$ Starting Point HW$1-$ Q$6$ Example

Balance Sheet $($BS$)2017$ Balance Sheet $($BS$)2017$

ASSETS ASSETS

Current Assets Current Assets

Cash $$0\mathrm{.}00$ Cash $$100,000\mathrm{.}00$

Marketable Securities $$0\mathrm{.}00$ Marketable Securities $$0\mathrm{.}00$

Accounts Receivable $$0\mathrm{.}00$ Accounts Receivable $$0\mathrm{.}00$

Inventories $$0\mathrm{.}00$ Inventories $$0\mathrm{.}00$

Total Current Assets $$0\mathrm{.}00$ Total Current Assets $$100,000\mathrm{.}00$

Gross Fixed Assets $($at Cost$)$ Gross Fixed Assets $($at Cost$)$

Land and Buildings $$0\mathrm{.}00$ Land and Buildings $$0\mathrm{.}00$

Machinery and Equipment $$0\mathrm{.}00$ Machinery and Equipment $$0\mathrm{.}00$

Furniture and Fixtures $$0\mathrm{.}00$ Furniture and Fixtures $$0\mathrm{.}00$

Vehicles $$0\mathrm{.}00$ Vehicles $$0\mathrm{.}00$

Other $($includes Financial Leases$)$ $$0\mathrm{.}00$ Other $($includes Financial Leases$)$ $$0\mathrm{.}00$

Total Gross Fixed Assets $$0\mathrm{.}00$ Total Gross Fixed Assets $$0\mathrm{.}00$

Less: Accumulated Depreciation $$0\mathrm{.}00$ Less: Accumulated Depreciation $$0\mathrm{.}00$

Net Fixed Assets $$0\mathrm{.}00$ Net Fixed Assets $$0\mathrm{.}00$

Total Assets $$0\mathrm{.}00$ Total Assets $$100,000\mathrm{.}00$

LIABILITIES & STOCKHOLDERS EQUITY LIABILITIES & STOCKHOLDERS EQUITY

Current Liabilities Current Liabilities

Accounts Payable $$0\mathrm{.}00$ Accounts Payable $$0\mathrm{.}00$

Notes Payable $$0\mathrm{.}00$ Notes Payable $$0\mathrm{.}00$

Accruals $$0\mathrm{.}00$ Accruals $$0\mathrm{.}00$

Total Current Liabilities $$0\mathrm{.}00$ Total Current Liabilities $$0\mathrm{.}00$

Long$-$Term Debt $($incl$.$ financial leases$)$ $$0\mathrm{.}00$ Long$-$Term Debt $($incl$.$ financial leases$)$ $$0\mathrm{.}00$

Total Liabilities $$0\mathrm{.}00$ Total Liabilities $$0\mathrm{.}00$

Stockholder Equity Stockholder Equity

Preferred Stock $$0\mathrm{.}00$ Preferred Stock $$0\mathrm{.}00$

Common Stock $$0\mathrm{.}00$ Common Stock $$0\mathrm{.}00$

Paid$-$in capital in excess of par on common stock $$0\mathrm{.}00$ Paid$-$in capital in excess of par on common stock $$0\mathrm{.}00$

Retained Earnings $$0\mathrm{.}00$ Retained Earnings $$100,000\mathrm{.}00$

Total stockholders' equity $$0\mathrm{.}00$ Total stockholders' equity $$100,000\mathrm{.}00$

Total Liabilities and Stockholders Equity $$0\mathrm{.}00$ Total Liabilities and Stockholders Equity $$100,000\mathrm{.}00$