The eight basic accounts presented in the condensed balance sheet shown below the four assets, the two liabilities, and the two owners' equities. How does each of the following transactions change the company's financial condition?
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Condensed Balance Sheet
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Cash
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$250,000
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Operating liabilities
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$350,000
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Receivables
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$300,000
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Interest-bearing liabilities
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$500,000
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Inventory
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$400,000
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Owner's invested capital
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$250,000
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PP&E, net
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$550,000
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Owner's retained earnings
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$400,000
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Assets
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$1,500,000
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=
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Liabilities and Owner's Equity
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$1,500,000
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a. The business borrows $500,000 and signs a legal instrument called a note payable to the lender, promising to pay interest over the life of the loan and to return $500,000 at a future date.
b. The business invests $250,000 in a new machine that it will use for several years and pays for the purchase with a check.
c. The business owners invest an additional $750,000 in the business to aid in its growth and expansion.
d. The business distributes $100,000 of the profit it earned during the year to its shareowners.