Analyze the effect of the following transactions using the basic Accounting Equation showing your response in the template/ table below:
a. On January 1, the company issued 30,000 common shares at $15 per share.
b. On January 1, 2014, the company purchased land and a building from another company in exchange for $50,000 in cash and 10,000 common shares. Then land’s value is approximately one-quarter of the total value of the transaction (Hint: you need to determine a value for the common shares using the information given in part (a) and the land the building should be recorded in separate accounts).
c. Purchased a 2-year insurance policy for $4,800.
d. Bought another building for $100,000. Paid 25% in cash and the balance on a 10-year, 10% interest note payable.
e. During the year, inventory costing $225,000 was purchased, all on account.
f. Sales during the year were $275,000, of which credit sales were $200,000.
g. The inventory sold during the year had a cost of $180,000.( ie cost of goods sold exp.)
h. Payments to suppliers during the year totaled $195,000.
i. Operating expenses amounted to $40,000, all paid in cash.
j. The company’s income tax rate is 30%. It paid $9,000 to the Canada Revenue Agency before the end of the year.
k. Dividends of $12,000 were declared during the year, of which $1,000 remained unpaid at year end.
Required:
Use the table below to submit your response to the question above.